Teaching RPSC School Lecturer Mock Test Series 2024 Accountancy Financial Statement Analysis Ratio analysis
Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R).
Assertion (A) : If debt component of the total long-term funds employed is small, outsiders feel more secure.
Reason (R) : A high Debt-Equity Ratio is considered risky as it may put the firm into difficulty in meeting its obligations to outsiders.
In the context of the above statements, which one of the following is correct?
1
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
2
Both Assertion (A) and Reason (R) are true, and Reason (R) is the not correct explanation of Assertion (A).
3
Assertion (A) is true, but Reason (R) is false.
4
Assertion (A) is false, but Reason (R) is true.
5
Question Not Attempted