John Hamann began his company making herb vinegars from a recipe his grandmother had given him.As demand grew,he had to buy a large commercial kitchen.Which of the following ratios would a banker have been most interested in before allowing Hamann to borrow $500,000?
A)Liquidity ratios
B)Balance sheet ratios
C)Return on investment
D)Operating ratios
E)Debt ratios

Question

Quizplus · Accepted Answer

A banker would have been most interested in debt ratios to assess John Hamann's ability to repay the borrowed amount. The debt ratio measures the amount of debt a company has relative to its assets, providing insight into its ability to take on additional debt without jeopardizing its financial stability.

John Hamann Began His Company Making Herb Vinegars from a Recipe