Which of the Following Is Correct

question 47

Multiple Choice

Which of the following is correct?

• A) Generally, debt to total assets ratios do not vary much among different industries although they do vary for firms within a particular industry.
• B) Utilities generally have very high ordinary equity ratios due to their need for vast amounts of equity supported capital.
• C) The drug industry has a high debt to ordinary equity ratio because their earnings are very stable and thus, can support the large interest costs associated with higher debt levels.
• D) Wide variations in capital structures exist between industries and also between individual firms within industries and are influenced by unique firm factors including managerial attitudes.
• E) Since most shares sell at or around their book values, using accounting values provides an accurate picture of a firm's capital structure.

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Definitions:

Fiat Money

Currency that a government has declared to be legal tender, but it is not backed by a physical commodity.

The Euro

The official currency of 19 out of the 27 European Union countries, which forms a significant part of the world's economy.

Specialization In Production

The process by which individuals, businesses, or countries focus on producing a narrow range of goods or services to gain greater efficiencies.

Standard Of Living

Represents the level of wealth, comfort, material goods, and necessities available to a person, community, or society.