Which of the following, if true, strengthens the case that Streeter & Sons has too much debt?

A) The company has grown only slowly since its beginning.
B) The company's customer base has steadily increased in the last few years.
C) The company is outcompeting other similar companies in the area.
D) The company's current liabilities are higher than its current and fixed assets.
E) The company has built up a substantial amount of owners' equity.

Answer: D
Explanation: D) If what the company must pay within the next year is greater than both the assets it can convert into cash within a year and its relatively permanent assets, this suggests that the company may have too much debt. How quickly the company has grown (Choice A) may be due to any number of factors not related to debt, but it's certainly possible that it has grown slowly because it has refrained from borrowing large sums of money to promote rapid growth. Likewise, if its customer base has been steadily increasing (Choice B) or the company has been outcompeting its rivals (Choice C), this may be due to any number of factors, but it suggests that there's revenue available to meet liabilities. Choice E: A high level of owners' equity also suggests that the company can meet its liabilities.