Mike and Amanda Have Been Reviewing Their Financial Statements

Mike and Amanda have been reviewing their financial statements.Using the following information,they have asked you to determine their debt safety ratio and advise them about assuming more debt in the future.

A) Mike and Amanda have a manageable debt ratio and can assume more debt.
B) Mike and Amanda have a debt ratio that is very low and can consider assuming more debt.
C) Mike and Amanda have a debt ratio around the danger range and should wait before assuming more debt.
D) Mike and Amanda have a debt ratio that is very high and should assume no more debt.
E) It is impossible to tell what they should do.

Correct Answer:

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