Asked by Neala Kelly on Jun 29, 2024
Verified
All other things the same, if long-term debt is exchanged for short-term debt, the debt-to-equity ratio will be unchanged.
Debt-To-Equity Ratio
A measure used to evaluate a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.
Long-Term Debt
Financial obligations of a company that are due more than one year in the future, often in the form of loans or bonds.
Short-Term Debt
Financial obligations that are due for repayment within one year.
- Gain insight into how modifications in a corporation's capital structure influence its earnings and leverage indicators, like return on assets, debt-to-equity ratio, and book value per share.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
True
Explanation :
The debt-to-equity ratio is a measure of a company's financial leverage, calculated by dividing total debt by total equity. If the amount of debt stays the same but the maturity of the debt is shortened, it does not change the total amount of debt, and therefore does not affect the debt-to-equity ratio.
Learning Objectives
- Gain insight into how modifications in a corporation's capital structure influence its earnings and leverage indicators, like return on assets, debt-to-equity ratio, and book value per share.
Related questions
All Other Things the Same, If the Company Purchases Equipment ...
To Increase Total Asset Turnover, Management Must Either Increase Sales ...
The _____ Ratio Is Unusual in That, It Is Commonly ...
CVD, Inc Has a Debt Ratio of 50%, and an ...
The Marshall Company Has Determined That Its Return on Equity ...