A Firm Has Current Liabilities of $200,000, Long Term Debt

question 14

Multiple Choice

A firm has current liabilities of $200,000, long term debt of $500,000, and equity of $1,200,000. Its debt ratio is_____.

• A) 0.37
• B) 0.24
• C) 0.42
• D) 0.64

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Definitions:

Demand Curve

A graph representing the relationship between the price of a good and the quantity demanded, with price on the vertical axis and quantity on the horizontal axis.

Loanable Funds

The money available for borrowing in the financial markets, determined by savings and investments.

Savers

Individuals or entities that set aside a portion of current income for future use, often by depositing money in savings accounts or investing in securities.

Inflation Rate

The speed at which the overall price level of goods and services increases, leading to a decrease in purchasing power.