Which of the following is a leverage ratio?
A) inventory turnover ratio
B) return on sales
C) debt-to-equity ratio
D) acid-test ratio

Question

Quizplus · Accepted Answer

Debt-to-equity ratio measures the amount of debt a company is using to finance its operations compared to the amount of equity. It is used as a leverage ratio to analyze a company's financial risk. The other options are not leverage ratios - inventory turnover ratio measures how many times a company sells and replaces its inventory in a period, return on sales calculates a company's profitability, and acid-test ratio measures a company's liquidity.

Which of the Following Is a Leverage Ratio