Question

All things being equal except the ratio of fixed assets to long-term liabilities, a lender would prefer to lend to a company whose ratio is:

Answer 1

Answer: d. 3.5

Step-by-step explanation:

The Fixed assets to long-term liabilities ratio is used to check how much of a company's debt can be covered by its fixed assets because fixed assets can be sold to recover the debt if need be.

It is calculated by dividing the fixed assets by the long-term labilities of the company and in general, the higher this ratio, the better. The highest from the options is 3.5 so that is the answer.