Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What best explains why a firm's ratio of long-term debt/total capital is lower than the industry average, while the ratio of income before interest and

What best explains why a firm's ratio of long-term debt/total capital is lower than the industry average, while the ratio of income before interest and taxes/debt interest charges is higher than the industry average?

A.

The firm has a high ratio of current assets/current liabilities.

B.

The firm pays lower interest on long-term debt than the average firm.

C.

None of the options are correct.

D.

The firm has more short-term debt than average.

E.

The firm has a high ratio of total cash flow/long term debt.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Futures and Options Markets

Authors: John C. Hull

8th edition

978-1292155036, 1292155035, 132993341, 978-0132993340

More Books

Students also viewed these Finance questions