If the Debt Ratio Is 0

question 57

Multiple Choice

If the debt ratio is 0.5,what is the debt-equity ratio? (Assume no leases.)

• A)0.5
• B)1.0
• C)2.0
• D)4.0

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Definitions:

Convertible Bond

A convertible bond is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company, usually at certain times during its life.

Common Stock

A type of equity security that represents ownership in a corporation and entitles the holder to vote at shareholder meetings and receive dividends.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation each year over the useful life of an asset.

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.