Asked by Tracy Thich on Jun 13, 2024
Verified
The financial ratio measured as the firm's long-term debt divided by its total capitalization is:
A) The interval measure.
B) The equity multiplier.
C) The total debt ratio.
D) The long-term debt ratio.
E) The debt-equity ratio.
Long-Term Debt
Borrowings of a company not due for payment within the upcoming 12-month period, often used for major investments or acquisitions.
Total Capitalization
The sum of a company's long-term debt, equity, and retained earnings, reflecting the total funding sourced from investors and creditors.
Debt-Equity Ratio
A financial ratio used to understand a company's leverage, by dividing its complete liabilities by the equity available to shareholders.
- Pinpoint and tally various financial ratios, specially those concerning profitability, liquidity, and efficiency aspects.
Verified Answer
SW
Shay-La WinnsJun 13, 2024
Final Answer :
D
Explanation :
The long-term debt ratio is specifically calculated by dividing a firm's long-term debt by its total capitalization, which includes both its long-term debt and its equity. This ratio helps in assessing the proportion of a company's financing that comes from long-term debt.
Learning Objectives
- Pinpoint and tally various financial ratios, specially those concerning profitability, liquidity, and efficiency aspects.