The fiNancial Ratio Measured as the fiRm's Long-Term Debt Divided

question 95

Multiple Choice

The financial ratio measured as the firm's long-term debt divided by its total capitalization is:

• A) The interval measure.
• B) The equity multiplier.
• C) The total debt ratio.
• D) The long-term debt ratio.
• E) The debt-equity ratio.

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Definitions:

Accounts Receivable

Accounts receivable refers to the money owed to a company by its customers for goods or services delivered but not yet paid for, representing a line of credit from the company to the customer.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term health and efficiency of its operations.

Spontaneous Financing

Financing that arises naturally from the operations of a company, such as trade credit that increases as sales grow, without requiring explicit negotiation or arrangements.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency.