Assume an organization’s debt-to-equity ratio is less than 1.0. Which of the following statements is most correct?
a. The organization’s creditors have provided less than $1 in capital per dollar of equity capital.
b. The organization has more equity than debt in its capital structure.
c. An increase in the debt-to-equity ratio would increase the riskiness of the creditors’ position.
d. Answers a. and b. are correct.
e. Answers a., b., and c. are correct. (Hint: Option D is incorrect. It has been marked as incorrect.)