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A Firm with Total Debt to Total Assets of 50

question 191

True/False

A firm with total debt to total assets of 50% and an interest coverage ratio of 0.5 times would appear to be safely utilizing financial leverage.


Definitions:

Price-Earnings Ratios

A financial metric used to evaluate the valuation of a company's stock, calculated as the market price per share divided by the earnings per share.

Earnings per Share

A company's net profit divided by its number of outstanding shares, indicating how much money each share makes in net income.

Annual Dividend

The total amount of dividends paid to shareholders over a year.

Share

A unit of ownership in a company or financial asset that represents a proportionate claim on its assets and earnings.

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