Final answer:
b) Book values are more conservative
Corporate treasurers prefer book values for debt ratios because they are more conservative and less subject to market fluctuations, providing a more stable basis for financial analysis.
Step-by-step explanation:
Corporate treasurers often prefer the use of book values when measuring debt ratios because book values are generally more conservative. Book values are based on historical cost rather than current market conditions, which can fluctuate significantly and introduce a level of uncertainty that treasurers may wish to avoid. Being more conservative means that book values tend to understate asset values and overstate liabilities, providing a more prudential picture of a firm's financial position. Additionally, while book values do not consider future projections directly, they are typically less prone to subjective interpretations compared to market values, which must account for expectations about the firm's future performance and the economic environment. Manipulation of book values, although possible, tends to be constrained by regulatory and accounting standards.