Ratios that measure the firm's financial leverage are known as:
A) Asset management ratios.
B) Long-term solvency ratios.
C) Short-term solvency ratios.
D) Profitability ratios.
E) Market value ratios.

Question

Quizplus · Accepted Answer

Long-term solvency ratios, also known as financial leverage ratios, measure a company's ability to meet its long-term obligations. These ratios provide insight into the long-term financial stability of a firm by examining the relationship between its debt levels and equity.

Ratios That Measure the Firm's Financial Leverage Are Known As