FOX Company has a ratio of (total debt/total assets) that is above the industry average, and a ratio of (long term debt/equity) that is below the industry average.These ratios suggest that the firm
A)utilizes assets effectively.
B)has too much equity in the capital structure.
C)has relatively high current liabilities.
D)has a relatively low dividend payout ratio.
E)None of the options

Question

Quizplus · Accepted Answer

Total debt includes both current and long term debt; the above relationships could occur only if FOX Company has a higher than average level of current liabilities.

FOX Company Has a Ratio of (Total Debt/total Assets) That