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

question 12

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 above

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Definitions:

Operating Efficiency

A measure of how well a company uses its resources to produce goods or services.

Great Distances

Large physical separations between objects or locations, often involving travel or communication across extensive areas.

Cross-Functional Team

A team that operates with members who come from different functional units of an organization.

Horizontal Structure

A form of organizational structure where control and decision-making are spread horizontally across levels, emphasizing collaboration and teamwork.