Which of the following ratios is best suited to analyze how the company finances its projects?
A) inventory turnover
B) debt ratio
C) current ratio
D) acid test ratio
E) return on investment

Question

Quizplus · Accepted Answer

The debt ratio measures the proportion of a company's assets that are financed by debt. It is a key financial ratio that helps investors, creditors, and analysts estimate the amount of risk involved in lending to or investing in a company, and therefore is best suited to analyze how the company finances its projects. The other ratios listed, such as inventory turnover or return on investment, are better suited to analyze different aspects of a company's financial performance.

Which of the Following Ratios Is Best Suited to Analyze