Which of the Following Is the Debt-To-Equity Ratio Calculation

question 23

Multiple Choice

Which of the following is the debt-to-equity ratio calculation?

• A) Total current liabilities + Total long term liabilities) ÷ total shareholders' equity
• B) Total current liabilities ÷ total assets - shareholders' equity)
• C) Total liabilities ÷ total liabilities + shareholders' equity)
• D) Total long-term Liabilities ÷ Total shareholders' Equity
• E) Total current liabilities + total long-term liabilities) ÷ total long-term liabilities + shareholders' equity)

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Definitions:

Capital Lease

A lease agreement that is considered a purchase of an asset for accounting purposes, because it transfers substantially all the risks and rewards of ownership.

Bargain Purchase Price

A price for an asset that is significantly below its fair market value.

CRA

Credit Risk Analysis, assessing the risk of default on a loan by evaluating the potential borrower's creditworthiness, or it could stand for Canada Revenue Agency, the federal agency responsible for tax laws for the Canadian government.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically with shorter terms than capital leases.