A Total Debt Ratio of .35

question 54

Multiple Choice

A total debt ratio of .35:

• A) indicates that the firm is financed with 35% 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:

Outstanding Shares

The total number of shares of stock that are currently owned by shareholders, including both public investors and restricted insiders.

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be consumed or converted into cash in the near term.

Net Present Value

The disparity in present values of cash inflows versus cash outflows within a certain time span.

Equity Shares

Represent ownership shares in a company, giving shareholders voting rights and a claim on company profits in the form of dividends.