How Is the Leverage Ratio Calculated

question 1

Multiple Choice

How is the leverage ratio calculated?

• A)Total debt divided by total assets.
• B)Total assets divided by total debt.
• C)Average total assets divided by average common stockholders' equity.
• D)Average total debt divided by average total assets.

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Definitions:

Equivalent Unit

A measure used in cost accounting to express the amount of work done on a product in terms of fully completed units.

First-in

This principle dictates that the earliest goods to be added to inventory are the first ones to be removed from it, commonly applied in financial and inventory management.

Conversion Costs

The sum of labor and overhead costs that are necessary to convert raw materials into finished products.

Equivalent Units

Equivalent units is a concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units.