You Are Considering a Stock Investment in One of Two

question 81

Multiple Choice

You are considering a stock investment in one of two firms (A and B) , both of which operate in the same industry. A finances its $20 million in assets with $18 million in debt and $2 million in equity. B finances its $20 million in assets with $2 million in debt and $18 million in equity. Calculate the debt-to-equity ratio for the two firms.

• A) Firm A: 9 times; Firm B: 1.11 times
• B) Firm A: 19 times; Firm B: .11 times
• C) Firm A: 9 times; Firm B: .11 times
• D) Firm A: 19 times; Firm B: 1.11 times

Comprehend the ethical considerations in business research and documentation.

Recognize the importance of document structure, approach, and audience analysis in business communication.

Distinguish between solicited and unsolicited proposals and their planning factors.

Understand plagiarism and its avoidance in business reporting and research.

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Definitions:

Critical Thinking

The intellectual process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and evaluating information to reach an answer or conclusion.

Analysis

The process of examining components or structures of a whole in detail to understand its nature or to determine its essential features.

Maturity

The state of being fully developed in body or mind, often associated with the capacity to respond to the environment in an appropriate manner.

Internal Bleed

Bleeding within the body that is not visible from the outside, often a serious medical condition requiring immediate attention.