All Other Things the Same, If Long-Term Debt Is Exchanged

question 141

True/False

All other things the same, if long-term debt is exchanged for short-term debt, the debt-to-equity ratio will be unchanged.

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Definitions:

Run Out Of Money

A situation where a business or individual exhausts their financial resources and cannot meet financial obligations.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to run its day-to-day operations.

Short-Term Debt

Financial obligations due within one year, used by companies for immediate financing needs.

Healthy Profitability

Healthy profitability indicates a robust and sustainable level of earnings for a business, suggesting it is well-positioned for growth and stability.