What Best Explains Why a Firm's Ratio of Long-Term Debt/total

question 38

Multiple Choice

What best explains why a firm's ratio of long-term debt/total capital is lower than the industry average, while the ratio of income before interest and taxes/debt interest charges is higher than the industry average?

• A)The firm pays lower interest on long-term debt than the average firm.
• B)The firm has more short-term debt than average.
• C)The firm has a high ratio of current assets/current liabilities.
• D)The firm has a high ratio of total cash flow/long term debt.

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