Corporate financial officers prefer to use book values when measuring debt ratios because:
A)book values are more stable than market values.
B)debt covenant restrictions are usually expressed in book value terms.
C)rating agencies measure debt ratios in book values terms.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

Corporate financial officers prefer book values for debt ratios because they are more stable than market values, debt covenants are often based on book values, and rating agencies typically use book values for consistency.

Corporate Financial Officers Prefer to Use Book Values When Measuring