Ratios which analyse a firm's ability to meet its long-term obligations are called:
A)profitability ratios
B)asset utilisation ratios
C)leverage ratios
D)market value ratios
E)liquidity ratios

Question

Quizplus · Accepted Answer

Leverage ratios measure a company's ability to meet its long-term obligations, including debt and other liabilities. They analyze the extent to which a company uses debt instead of equity to finance its operations. Examples of leverage ratios include debt-to-equity ratio, interest coverage ratio, and debt-to-capitalization ratio. Profitability ratios analyze a firm's ability to generate profits, asset utilization ratios measure how efficiently a company uses its assets, market value ratios analyze a firm's current market value, and liquidity ratios analyze a company's ability to meet its short-term obligations.

Ratios Which Analyse a Firm's Ability to Meet Its Long-Term