If a firm has substantial capital or financing leases disclosed in the notes but not capitalized in the financial statements, then:
a. the times interest earned ratio will be overstated, based upon the financial statements.
b. the fixed charge ratio will be overstated, based upon the financial statements.
c. the debt ratio will be understated.
d. the working capital will be understated.
e. None of the answers are correct.
C
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