Simmons Company is in a high growth industry. You are examining its long-term solvency and notice that they have significant deferred tax liabilities. Upon further examination of the tax footnote you find that virtually all of the deferred tax liabilities are due to plant and equipment. For purposes of analysis the deferred tax liability should be treated as:

Question

Quizplus · Accepted Answer

Deferred tax liabilities related to plant and equipment are often considered as equity for analysis purposes if they are not expected to reverse in the near future, as they represent a long-term source of financing.

Simmons Company Is in a High Growth Industry