Which of the following ratios measure the relationship between debt and equity?
I. The debt ratio
II. The current ratio
III. The equity (proprietorship) ratio
IV. The leverage ratio (total assets/total equity)
A) I, II, III and IV
B) III and IV only
C) I and III only
D) I, III and IV only

Question

Quizplus · Accepted Answer

The debt ratio, equity (proprietorship) ratio, and leverage ratio all measure the relationship between debt and equity in different ways. The current ratio, however, measures short-term liquidity and is not directly related to the relationship between debt and equity.

Which of the Following Ratios Measure the Relationship Between Debt