GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Net Profit / Net Sales
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Liquid Assets / Current Liability
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Long term Debt / Equity Capital
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Current Assets / Current Liability
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Detailed explanation-1: -The long-term debt to equity ratio shows how much of a business’ assets are financed by long-term financial obligations, such as loans. To calculate long-term debt to equity ratio, divide long-term debt by shareholders’ equity. As we covered above, shareholders’ equity is total assets minus total liabilities.
Detailed explanation-2: -Long term debt to equity ratio is a leverage ratio comparing the total amount of long-term debt against the shareholders’ equity of a company. The goal of this ratio is to determine how much leverage the company is taking. A higher ratio means the company is taking on more debt.
Detailed explanation-3: -Long Term Debt Ratio = Long Term Debt ÷ Total Assets The sum of all financial obligations with maturities exceeding twelve months, including the current portion of LTD, is divided by a company’s total assets.