Which of the following ratios measures the extent to which a firm uses debt as a source of financing and its ability to service that debt?

A) liquidity ratios
B) activity ratios
C) leverage ratios
D) profitability ratios

Leverage Ratios

Financial ratios that measure the extent to which a firm uses debt as a source of financing and its ability to service that debt.

Financing

The process of providing or obtaining the funds necessary for an investment, project, or business venture.

Debt

An amount of money borrowed by one party from another under the condition that it is to be repaid, usually with interest.