A Firm Has $100 Million in Current Liabilities, $200 Million

question 21

Multiple Choice

A firm has $100 million in current liabilities, $200 million in long-term debt, $300 million in stockholders' equity, and total assets of $600 million. Calculate the firm's ratio of long-term debt to long-term debt plus equity.

• A)40 percent
• B)20 percent
• C)50 percent
• D)17 percent

---

Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, reflecting the time value of money and risk.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Accumulated

The total gathered or collected amount over a period of time, referring to various contexts such as finances, data, or materials.

Invested at

Refers to the specific time or price point at which investments are made into a financial instrument or asset.