Asked by Mariia Dublevska on Jun 04, 2024
Verified
The debt-to-equity ratio measures which of the following?
A) Liquidity.
B) Solvency.
C) Profitability.
D) Market strength.
Debt-To-Equity Ratio
A financial metric that shows the comparative amount of equity from shareholders and borrowed funds used to acquire assets for a company.
Solvency
The ability of an entity to pay its long-term debts and financial obligations as they become due.
- Assess the fiscal health and leverage of a business by investigating its return on equity (ROE) and the proportion of debt to equity.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
B
Explanation :
The debt-to-equity ratio measures the amount of debt a company has relative to its equity. It is a solvency ratio that evaluates a company's ability to meet long-term financial obligations. A higher debt-to-equity ratio indicates that a company has more financial leverage and is more reliant on debt financing, which can increase financial risk.
Learning Objectives
- Assess the fiscal health and leverage of a business by investigating its return on equity (ROE) and the proportion of debt to equity.