A firm has $100 million in current liabilities, $200 million in long-term debt, $300 million in stockholders' equity, and total assets of $600 million. Calculate the firm's ratio of long-term debt to long-term debt plus equity.

Question

Quizplus · Accepted Answer

The ratio of long-term debt to long-term debt plus equity is calculated as long-term debt divided by the sum of long-term debt and equity. So, it's $200 million / ($200 million + $300 million) = $200 million / $500 million = 0.4 or 40%.

A Firm Has $100 Million in Current Liabilities, $200 Million