Which of the following ratios would an engagement partner most likely calculate when reviewing the balance sheet in the overall review stage of an audit?
A)Quick assets divided by accounts payable.
B)Accounts receivable divided by inventory.
C)Interest payable divided by interest receivable.
D)Total debt divided by stockholders' equity.

Question

Quizplus · Accepted Answer

The ratio of total debt to stockholders' equity is a measure of the company's leverage or financial risk, which is important for the overall review of the audit. The other ratios listed are more relevant for the substantive testing of specific account balances.

Which of the Following Ratios Would an Engagement Partner Most