The ratio that measures the percentage of financing from creditors is the:
A)Current ratio.
B)Times interest earned ratio.
C)Debt to assets ratio.
D)Price/earnings ratio.

Question

Quizplus · Accepted Answer

The debt to assets ratio measures the percentage of financing from creditors by comparing a company's total debt to its total assets. It is a key indicator of a company's financial leverage, and higher ratios indicate that a greater portion of the financing comes from creditors. The current ratio measures a company's ability to pay its short-term liabilities with its current assets, while the times interest earned ratio measures a company's ability to meet its interest payments on outstanding debt. The price/earnings ratio measures a company's stock price relative to its earnings per share.

The Ratio That Measures the Percentage of Financing from Creditors