For proprietary ratio, a value closer to zero indicates a _________________ and is not favourable for the firm.

higher percentage of debt as compared to equity

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lower percentage of debt as compared to equity

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Can't say

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None of these

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Solution

The correct option is B
lower percentage of debt as compared to equity

For proprietary ratio, a value closer to zero indicates a higher percentage of debt as compared to equity and is unfavourable for the firm.

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Similar questions

A ______ debt-to-equity ratio indicates a lower amount of financing by debt via lenders versus funding through equity via shareholders.

A lower value of debt to equity ratio represents:

The debt-to-equity ratio is a measure of a firm's ___

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