Marcus Lee is examining the solvency of Apex Manufacturing and has collected the following data (in millions of euros):
|
2005 |
2004 |
2003 |
|
|
Total debt |
€2,000 |
€1,900 |
€1,750 |
|
Total equity |
€4,000 |
€4,500 |
€5,000 |
Which of the following would be the most appropriate conclusion for Lee?
a. The company is becoming increasingly less solvent, as evidenced by the increase in its debt-to-equity ratio from 0.35 to 0.50 from 2003 to 2005.
b. The company is becoming less liquid, as evidenced by the increase in its debt-to-equity ratio from 0.35 to 0.50 from 2003 to 2005.
c. The company is becoming increasingly more liquid, as evidenced by the increase in its debt-to-equity ratio from 0.35 to 0.50 from 2003 to 2005.