If a Firm Has Three Times as Much Equity as Debt

question 42

Multiple Choice

If a firm has three times as much equity as debt in its capital structure,then the firm has:

• A) 25.0% debt.
• B) 66.7% equity.
• C) 40.0% debt.
• D) 33.3% equity.

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Definitions:

Consolidated

Referring to the financial statements that combine the financial information of a parent company with its subsidiaries to present as a single entity.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board for global use.

AFS-Debt Securities

Available-For-Sale Debt Securities are debt investments not classified as held-to-maturity or trading securities and can be sold before maturity.

Impairment Losses

Financial losses recognized when the carrying amount of an asset exceeds its recoverable amount, leading to a downward adjustment in its valuation.