Corporate financial officers prefer to use book values when measuring debt ratios because:
A)book values are more stable than market values.
B)debt covenant restriction are usually expressed in book value terms.
C)rating agencies measure debt ratios in book values terms.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

Book values are more stable than market values, debt covenants are often expressed in book value terms, and rating agencies typically use book values for debt ratios.

Corporate Financial Officers Prefer to Use Book Values When Measuring