Jane Rollins, an accountant for Texas Enterprises, is particularly concerned about her company's ability to handle its long-term debt. To properly analyze this situation, Jane should keep a close eye on her firm's
A) cash ratios.
B) sales ratios.
C) activity ratios.
D) debt ratios.
E) profitability ratios.

Question

Quizplus · Accepted Answer

Debt ratios are specifically designed to measure a company's ability to handle its long-term debt obligations. These ratios, such as the debt-to-equity ratio or the interest coverage ratio, provide insights into the financial leverage and overall debt burden of the company, which is exactly what Jane is concerned about.

Jane Rollins, an Accountant for Texas Enterprises, Is Particularly Concerned