Use the Table for the Question(s) Below

question 4

Multiple Choice

Use the table for the question(s) below.
Luther Industries currently has the following balance sheet (in Thousands of dollars) :
Luther is about to add a new fleet of delivery trucks. The price of the fleet is $1.5 million.
-If Luther acquires the new fleet of delivery trucks using an operating lease, Luther's debt-to-equity ratio will be closest to ________.

• A) 2.0
• B) 1.5
• C) 0.80
• D) 0.66

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Definitions:

Adjustment

An entry in bookkeeping that corrects or allocates income and expenditure to the appropriate accounting periods.

Income Statement Approach

Refers to a methodology in accounting that emphasizes calculating the profitability of a business by deducting total expenses from total revenues to arrive at the net income, showcasing the company's financial performance over a specific period.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collected, used to reduce the overall accounts receivable value on the balance sheet.

Adjustment

A process of altering the value of accounts to more accurately reflect their true value at the end of an accounting period.