Modifications and Extinguishments

Question 1

S/T obligations can be reported as L/T obligations if:

Answer 1

(1. ) If it INTENDS to refinance S/T into L/T

(2. ) Demonstrates ability to refinance

Question 2

What is the debt to equity ratio?

Answer 2

The debt-to-equity ratio is the relationship between total liabilities and total equity. Thus, here we divide total liabilities by total equity.