Delavan Company Has Fixed Assets of $5 Billion, Current Assets

question 130

Multiple Choice

Delavan Company has fixed assets of $5 billion, current assets of $2 billion, long-term liabilities of $2 billion, current liabilities of $1 billion, and owners' equity of $2 billion. What is Delavan's debt-to-equity ratio?

• A) 1.5
• B) 0.9
• C) 1.2
• D) 0.4
• E) 0.8

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output typically decreasing with increasing scale.

Entry Barrier

Obstacles that make it difficult to enter a particular market, including high start-up costs, strict regulations, or significant competition.

Marginal Revenue

The supplementary earnings achieved by selling another unit of a good or service.

Demand Schedule

A table showing the quantity of a good that consumers are willing to buy at various price levels, holding all other factors constant.