________ ratios describe the extent to which the firm relies on debt to finance its operations.

Question

Quizplus · Accepted Answer

Leverage ratios, such as debt-to-equity and debt-to-assets ratios, measure how much of a company's assets are funded by debt rather than equity. These ratios provide insight into the level of financial risk taken on by the company, as high levels of debt can make a company more vulnerable to economic downturns or interest rate increases.

________ Ratios Describe the Extent to Which the Firm Relies