Firm a Has a Total Debt to Total Assets Ratio

question 139

Multiple Choice

Firm A has a total debt to total assets ratio of 50% and an interest coverage ratio of 1.0.Firm B has a total debt total assets ratio of 80% and an interest coverage ratio of 10.0.Based on this limited information firm ________ appears to be in ________ debt management position than firm ________.

• A)A, better, B
• B)B, better, A
• C)A, a comparable, B
• D)none of the above

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Definitions:

Heuristic Method

A problem-solving strategy that employs practical methods or shortcuts to generate solutions that are "good enough" for solving complex problems.

Mnemonic Device

A tool that helps remember information through patterns, such as sequences of letters, ideas, or associations.

Phonemes

The smallest unit of sound in a language that can distinguish one word from another.

Morphemes

The smallest grammatical unit in a language, a word or part of a word that cannot be further divided and has a meaning or grammatical function.