Question

30. A total debt ratio of 0.35: A. indicates that the firm is financed with 35% long-term debt. B. would exist if a firm had liabilities of $700 and assets of $2,000. C. indicates that 35 cents of every dollar of capital is in the form of short-term debt. D. indicates that 35 cents of every dollar of capital is in the form of long-term debt.

          30. A total debt ratio of 0.35:
A. indicates that the firm is financed with 35% long-term debt.
B. would exist if a firm had liabilities of $700 and assets of $2,000.
C. indicates that 35 cents of every dollar of capital is in the form of short-term debt.
D. indicates that 35 cents of every dollar of capital is in the form of long-term debt.

30. A total debt ratio of 0.35:
A. indicates that the firm is financed with 35% long-term debt.
B. would exist if a firm had liabilities of 700 and assets of2,000.
C. indicates that 35 cents of every dollar of capital is in the form of short-term debt.
D. indicates that 35 cents of every dollar of capital is in the form of long-term debt.

Added by Sean H.

Principles of Economics

Gregory Mankiw 8th Edition

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Solved by Expert Willis James

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So, if the total debt ratio is 0.35, it means that the total debt is 35% of the total assets. Option A states that the firm is financed with 35% long-term debt. This is not necessarily true because the total debt ratio includes both long-term and short-term Show more…

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explanation 30.A total debt ratio of0.35: A. indicates that the firm is financed with 35% long-term debt. B. would exist if a firm had liabilities of $700 and assets of S2,000 C. indicates that 35 cents of every dollar of capital is in the form of short-term debt D. indicates that 35 cents of every dollar of capital is in the form of long-term debt.