Which of the following statements is true?
A)The debt-to-assets ratio requires only information found on the balance sheet.
B)The net profit margin ratio requires only information found on the balance sheet.
C)The asset turnover ratio requires only information found on the income statement.
D)The debt-to-assets ratio and the asset turnover ratio are used to evaluate profitability of the company.

Question

Quizplus · Accepted Answer

The debt-to-assets ratio is calculated using only balance sheet information, specifically total liabilities and total assets. The net profit margin ratio and asset turnover ratio both require information from both the income statement and balance sheet. Only D is incorrect; the debt-to-assets ratio is used to evaluate the company's leverage, not profitability, while the asset turnover ratio is used to evaluate efficiency.

Which of the Following Statements Is True