This company has a financial covenant to maintain debt to capital ratio (D/k) of no more than 50%. The financial covenant would be in any company's loan, note of bond agreement. 

Select the best answer.

A.

The ratio is 50% and the company is not in compliance

B.

The ratio is 2.0 and the company is not in compliance

C.

The ratio is 33% and the company is in compliance

D.

None of the answers presented is correct

E.

The ratio is 33% and the company is not in compliance

F.

This company does not have any borrowed money so it does not have a borrowing agreement

G.

The ratio is 50% and the company is in compliance

 

Transcribed Image Text:

Simple Balance Sheet Assets Cash Accounts Receivable Total Assets Liabilities & Owner's Equity Liabilities Bank Loan Accounts Payable Total Liabilities Owner's Equity Acme Photo, Capital Total Owner's Equity 1000.00 500.00 $1500.00 250.00 750.00 $1000.00 500.00 $500.00 Total Liabilities & Owner's Equity $1500.00 Simple Balance Sheet Assets Cash Accounts Receivable Total Assets Liabilities & Owner's Equity Liabilities Bank Loan Accounts Payable Total Liabilities Owner's Equity Acme Photo, Capital Total Owner's Equity 1000.00 500.00 $1500.00 250.00 750.00 $1000.00 500.00 $500.00 Total Liabilities & Owner's Equity $1500.00

Answer rating: 100% (QA)

E The ratio is 33 and the company is not in compliance Exp... View the full answer