Assume the Following Data: Long-Term Debt = 100; Value of Leases

question 46

Multiple Choice

Assume the following data: Long-term debt = 100; Value of leases = 20; Book value of equity = 80; Market value of equity = 100.Calculate the debt ratio.

• A)0.50
• B)0.55
• C)0.56
• D)0.60

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Definitions:

Credit Sales

Sales made by a business where payment is not received at the time of sale but is instead deferred to a future date, typically involving an agreement or credit terms.

Customer Payments

Monies received by a company from its customers in exchange for goods or services provided.

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future.

Balance Sheet

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a particular point in time, offering a snapshot of its financial condition.