A Company Reports the Following in Relation to Its Latest

question 10

Multiple Choice

A company reports the following in relation to its latest financial year:
$$\begin{array} { l r } \text { Current assets } & \$ 300 \\\text { Non-current assets } & 700 \\\text { Current liabilities } & 150 \\\text { Non-current liabilities } & 250 \\\text { Shareholders' equity } & 600\end{array}$$
If the company earns a net profit after tax in the following year of $40,all received in cash,and uses this cash to repay some of its non-current liabilities,and there are no other changes in its balance sheet,its total-debt-to-equity ratio will be:

• A) unchanged
• B) 36.0%
• C) 56.25%
• D) 34.6%

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