An appraisal of a company's long term financial stability relative to a second company's long term financial stability can be achieved by:

Question

Quizplus · Accepted Answer

Calculating each company's debt to equity ratio provides an indication of the financial health of a company in terms of its ability to meet its long term financial obligations. A lower debt to equity ratio indicates a more stable financial position. Therefore, comparing the debt to equity ratios of the two companies will provide insight into their relative stability.

An Appraisal of a Company's Long Term Financial Stability Relative