What type of ratios measure the extent of a firm's financing with debt relative to equity and its ability to cover interest and fixed charges?
A) Activity ratios.
B) Liquidity ratios.
C) Market ratios.
D) Leverage ratios.

Question

Quizplus · Accepted Answer

Leverage ratios measure the extent to which a firm is financed with debt relative to equity, as well as its ability to cover interest and fixed charges. Examples of leverage ratios include debt-to-equity ratio, debt-to-assets ratio, and interest coverage ratio.

What Type of Ratios Measure the Extent of a Firm's