Ahmed wants to invest in Vivid Corp., an IT firm. The leverage ratio of Vivid is 130 percent. Based on the leverage ratio, what is Ahmed likely to deduce?
O Vivid makes 30 cents on every dollar of sales made, and it is efficient in controlling costs.
O Vivid's degree of equity is high compared to its debt.
O Vivid could face problems in meeting promises made to stockholders.
O Vivid is a safe option for lenders and investors.
