Your debt-to-equity ratio (the total long term debt divided by the total shareholder equity) will determine the interest rate of when raising long term debt True False
Question
Your debt-to-equity ratio (the total long term debt divided by the total shareholder equity) will determine the interest rate of when raising long term debt True False
Solution
False. While the debt-to-equity ratio is an important indicator of a company's financial health and risk level, it is not the sole determinant of the interest rate when raising long-term debt. Other factors such as the company's credit rating, market conditions, and the overall economic environment also play a significant role in determining the interest rate.
Similar Questions
When your firm's debt-to-equity ratio exceeds 4, the long term debt interest rate is 3%. True False
The debt to equity ratio indicates:The net worth of the companyThe proportion of the company financed by lenders versus ownersA company's working capital funding gapThe liquidity of the company
Which ratio measures a company's ability to meet its long-term debt obligations?a.Acid-test ratiob.Current ratioc.Debt-to-equity ratiod.Return on equity ratio
Which of the following ratios is considered a measure of a company’s ability to pay long-term debt?Group of answer choicesprice/earnings ratiotimes-interest-earned ratioacid-test ratioearnings per share of common stock
Debt ratio is the ratio of
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