Asked by Katelynd Hayward on Jun 11, 2024
Verified
Ratio of liabilities to stockholders' equity
A) Assess the profitability of the assets
B) Assess how effectively assets are used
C) Indicate the ability to pay current liabilities
D) Indicate how much of the company is financed by debt and equity
E) Indicate instant debt-paying ability
F) Assess the profitability of the investment by common stockholders
G) Indicate future earnings prospects
H) Indicate the extent to which earnings are being distributed to common stockholders
Liabilities To Stockholders' Equity
Liabilities to Stockholders' Equity ratio indicates the financial leverage of a company, comparing the total liabilities to the total stockholders' equity to assess financial health.
Profitability
A measure of how much profit a business generates compared to its size, sales, or assets.
Debt
Debt is an amount of money borrowed by one party from another, which is expected to be paid back with interest.
- Gain insights into performing calculations and making sense of assorted financial ratios.
Verified Answer
PK
Pavan KumawatJun 14, 2024
Final Answer :
D
Explanation :
The ratio of liabilities to stockholders' equity is used to indicate how much of the company is financed by debt and equity, showing the balance between money the company owes and money invested by its owners.
Learning Objectives
- Gain insights into performing calculations and making sense of assorted financial ratios.