If a firm failed to classify the portion of long-term debt that is due within one year as a current liability,which of the following ratios would not be overstated?

Question

Quizplus · Accepted Answer

The debt to equity ratio would not be affected by the misclassification of long-term debt as a current liability since it only considers total debt (both current and long-term) in relation to equity. The quick ratio, current ratio, and current-debt-to-cash ratio would all be overstated if the portion of long-term debt due within one year was not classified as a current liability.

If a Firm Failed to Classify the Portion of Long-Term