A firm with no leases has a long-term debt-equity ratio of 50%.This means that the book value of equity:
A)equals the book value of long-term debt.
B)is less than the book value of long-term debt.
C)is greater than the book value of long-term debt.
D)is unknown in relation to the book value of long-term debt.

Question

Quizplus · Accepted Answer

The long-term debt-equity ratio of 50% means that for every dollar of equity, there is an equal amount (50 cents out of a dollar) of long-term debt, indicating that the book value of equity equals the book value of long-term debt.

A Firm with No Leases Has a Long-Term Debt-Equity Ratio