Quiz Q9 Fox company has a ratio of (total debt/totalassets) that is above the industry average,anda ratio of (long term debt/equity) that is belowthe industry average. These ratios suggestthat the firm (M)Select one:a. has too much equity in the capitalstructureb. has a relatively low dividend payoutratioc. utilizes assets effectivelyd. has relatively high current liabilities

The correct option with proper explanation are as follows

Fox company has a ratio of (total debt/total assets) that is above the industry average,and a ratio of (long term debt/equity) that is below the industry average. These ratios suggest that the firm (M)

Fox company has a ratio of (total debt/total assets) that is above the industry average,and a ratio of (long term debt/equity) that is below the industry average. These ratios suggest that the firm (M)

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 11P: The Rivoli Company has no debt outstanding, and its financial position is given by the following...

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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Quiz Q9

Fox company has a ratio of (total debt/total
assets) that is above the industry average,and
a ratio of (long term debt/equity) that is below
the industry average. These ratios suggest
that the firm (M)
Select one:
a. has too much equity in the capital
structure
b. has a relatively low dividend payout
ratio
c. utilizes assets effectively
d. has relatively high current liabilities

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