A Total Debt Ratio of 0.35

question 65

Multiple Choice

A total debt ratio of 0.35:

• A)Indicates that the firm is financed with 35 percent long-term debt
• B)Would exist if a firm had liabilities of $700 and assets of $2,000
• C)Indicates that 35 cents of every dollar of capital is in the form of short-term debt
• D)Indicates that 35 cents of every dollar of capital is in the form of long-term debt

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Definitions:

Credit Losses

Financial losses that a lender anticipates or experiences due to borrowers failing to make required payments.

Allowance for Doubtful Accounts

A contra-asset account used to estimate the amount of receivables that may not be collectible.

Net Income

A company's total earnings or profit, calculated as revenue minus expenses, taxes, and costs.