Which of the Following Is Correct for a Firm with a Debt-Equity

Multiple Choice

Which of the following is correct for a firm with a debt-equity ratio of .45 if long-term debt equals 500 and equity equals 2,000? The firm has:

A) Current liabilities that is valued at 400
B) Current assets that is valued at 400
C) Retained earnings that are valued at 900
D) preferred stock of 400 Total Debt = Current Debt + Long Term Debt
Debt/Equity Ratio = .45
Therefore, Debt/Equity Ratio x Shareholder Equity = Value of Total Debt
) 45 x 2,000 = 900 Total Debt
Therefore, if Total Debt = 900 = Current Debt + Long Term Debt
900 = Current Debt + 500