Financial ratios can be used to identify firms that might default on a loan or declare bankruptcy.

Question

Quizplus · Accepted Answer

Financial ratios are important tools for determining a company's financial health and stability. By assessing a company's liquidity, profitability, debt and asset management, and other factors, financial ratios provide insights into a company's ability to repay its debts and meet its financial obligations. These insights can help lenders and investors determine whether a company is likely to default on a loan or declare bankruptcy.

Financial Ratios Can Be Used to Identify Firms That Might