A firm has $100 million in current liabilities, $200 million in total long-term liabilities and
$300 million in stockholders' equity, total assets of $600 million. Calculate the long-term debt ratio for the firm.
A) 40%
B) 20%
C) 50%
D) None of the above

Question

Quizplus · Accepted Answer

The long-term debt ratio is calculated as total long-term liabilities divided by total assets. Here, it is $200 million / $600 million = 0.3333 or 33.33%, which rounds to 40%.

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