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XYZ, Inc. has a policy that it will only borrow additional money if its debt-to-equity ratio is below 75%. Select information from XYZ's financial statements
XYZ, Inc. has a policy that it will only borrow additional money if its debt-to-equity ratio is below 75%. Select information from XYZ's financial statements includes: Net income $40,000; total assets $200,000; total stockholders' equity $120,000. Compute the debt-to-equity ratio and decide if XYZ will consider borrowing additional money? Yes because the debt-to-equity ratio is 33.3% No because the debt-to-equity ratio is 150.0% No because the debt-to-equity ratio is 166.7% Yes because the debt-to-equity ratio is 66.7% If an owner of a company wishes total assets to increase, then: total debits must be greater than total credits. cash must be used to purchase more inventory there must be a corresponding increase in total liabilities and/or total stockholders' equity there must be a corresponding decrease in total liabilities and/or total stockholders' equity In capital budgeting, if the proposed investment has a positive net present value, then: O the payback period is always less than one year. the present value of the expected cash inflows is less than the present value of the expected cash outflows. the present value of the expected cash inflows exceeds the present value of the expected cash outflows. the payback period may not exceed three years
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