Westmoreland Company
Following Are Selected Data from Westmoreland Company's Financial

Westmoreland Company
Following are selected data from Westmoreland Company's financial statements.
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$\begin{array}{lrr}&2018&2017\\\text { Current liabilities } & \$ 230,000 & \$ 160,000 \\\text { Long-term debt } & 120,000 & 320,000 \\\text { Stockhol ders' equity } & 420,000 & 540,000 \\\text { Cash payments for additions to plant and equipment } & 45,000 & 32,000 \\\text { Net cash flow from operating activities } & 80,000 & 51,000 \\\text { Interest and principal payments } & 12,000 & 8,000 \\\text { Net operating cash flows before interest and taxes } & 68,000 & 43,000 \\\text { Net income } & 90,000 & 72,000 \\\text { Interest expense } & 8,500 & 11,500 \\\text { Income taxes } & 16,000 & 14,500 \\\text { Dividends paid } & 15,000 & 30,000\end{array}$ ​
-Refer to the Westmoreland Company data.
Westmoreland's debt-to-equity ratio for 2018 is

A) an indicator that Westmoreland Company's ability to meet current interest payments to creditors is increasing.
B) increasing slightly from 2017 to 2018.
C) an indicator that for every $1 of capital that stockholders provided,creditors provided $0.83.
D) an indicator that Westmoreland Company has relied on stockholders for funds more in 2017 than in 2018.

Correct Answer:

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