A firm with no leases has a long-term debt ratio of 50 percent.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

If the long-term debt ratio is 50%, it means that the book value of long-term debt is equal to the book value of equity, as both make up equal portions of the firm's capital structure.

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