Which of the following classifications of ratios measures the degree and effect of the company's use of borrowed funds to finance its operations?
A) liquidity
B) debt
C) equity
D) profitability

Question

Quizplus · Accepted Answer

The classification of ratios that measures the degree and effect of the company's use of borrowed funds to finance its operations is the debt ratio. This ratio compares a company's total debt to its total assets and measures the percentage of the company's assets that are financed by debt. A higher debt ratio indicates that the company is more reliant on borrowed funds, which can increase financial risk and interest expenses.

Which of the Following Classifications of Ratios Measures the Degree