A solvency measure that focuses specifically on the extent to which a company relies on outsiders for funds is:
A) cash flow from operations to capital expenditures ratio
B) debt service coverage ratio
C) times interest earned ratio
D) debt-to-equity ratio

Question

Quizplus · Accepted Answer

The debt-to-equity ratio compares a company's total liabilities to its shareholder equity, indicating the proportion of financing that comes from debt (outsiders) versus equity (owners). A higher debt-to-equity ratio indicates a higher reliance on outside funding, which could increase risk in the event of financial difficulty.

A Solvency Measure That Focuses Specifically on the Extent to Which