A firm has $100 million in current liabilities,$200 million in total long-term liabilities,$300 million in stockholders' equity,and total assets of $600 million.Calculate the firm's ratio of long-term debt to long-term debt plus equity.
A)40%
B)20%
C)50%
D)17%

Question

Quizplus · Accepted Answer

The ratio of long-term debt to long-term debt plus equity is calculated as long-term debt divided by the sum of long-term debt and equity. Here, long-term debt is $200 million, and equity is $300 million. So, the ratio is $200 million / ($200 million + $300 million) = 0.4 or 40%.

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