Explanation:

- The debt-equity ratio measures a company's financial leverage. It's calculated by dividing total liabilities by shareholder equity.

- A higher ratio indicates more debt relative to equity, implying higher financial risk.

- Option 1: 1:1

- This is a balanced position. Debt equals equity, indicating moderate leverage.

- Option 2: 2:1

- This suggests debt is twice the equity. This ratio can be risky, as the company relies heavily on debt.

- This is the Correct Answer.

- Option 3: 1:2

- A low-risk position. Equity is twice the debt, indicating strong financial stability.

- Option 4: 3:1

- Extremely risky. Debt significantly outweighs equity, leading to potential financial instability.

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