What Best Explains Why a Firm's Ratio of Long-Term Debt/total

question 40

Multiple Choice

What best explains why a firm's ratio of long-term debt/total capital is lower than the industry average, while the ratio of income before interest and taxes/debt interest charges is lower than the industry average

• A)The firm pays lower interest on long-term debt than the average firm.
• B)The firm has more short-term debt than average.
• C)The firm has a high ratio of current assets/current liabilities.
• D)The firm has a high ratio of total cash flow/long term debt.
• E)None of the options

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Definitions:

Resource Partitioning

The process by which competing species use the environment differently in a way that helps them to coexist.

Competitive Exclusion

A principle in ecology that states two species competing for the same limited resource cannot coexist at constant population values, one will always outcompete the other.

Competition

The interaction between organisms or species, where the fitness of one is lowered by the presence of another.

Commensalism

A type of symbiotic relationship where one organism benefits from the association while the other is neither benefited nor harmed.