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:

Divisional Performance Measure

Metrics or standards used to evaluate the efficiency, profitability, and productivity of a distinct segment or division within a larger company.

Divisional Managers

Individuals responsible for overseeing a specific division within a company, managing its operations, performance, and strategy.

Support Department Allocations

The costs of services provided by an internal support department and assigned to profit centers based on the usage of the service by each profit center.

Profit Center

A business unit or department within an organization that is responsible for generating its own revenue and profit.