A firm with no leases has a long-term debt 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

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 proportions of the firm's capital structure.

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