The debt/tangible net worth ratio: is the same as the debt ratio. has the same objectives...

The debt/tangible net worth ratio:

		is the same as the debt ratio.
		has the same objectives as the debt/equity ratio.
		includes both liabilities and shareholders' equity in the denominator.
		is a uniform computation across different companies.

Expert Solution

The correct answer is has the same objectives as the debt/equity ratio.

The tangible net worth refers to the difference between the total assets less total liabilities less tangible assets, The resulting figure is of shareholder equity. Therefore, the objective of this ratio is of same as of debt/equity ratio which aims to calculate proportion of debt in comparison to equity.

jeff jeffy answered 2 years ago

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