Question

A company has a debt-to-assets ratio of 0.45. If the company then borrows cash from the bank to finance a building acquisition, which of the following is a correct statement?

A) The debt-to-assets ratio will be unchanged.

B) The debt-to-assets ratio will increase.

C) The debt-to-assets ratio will decrease.

D) The debt-to-assets ratio will increase as a result of the cash received and then decrease as a result of the building acquisition.

Answer

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