Which of the following ratios are used as an indicator of the inherent risk in investing in an entity?
A) quick
B) current
C) leverage
D) gross profit

Question

Quizplus · Accepted Answer

Leverage ratios measure the extent to which a company uses debt to fund its operations. Since higher levels of debt increase the risk of default, leverage ratios are useful in indicating the inherent risk in investing in an entity. Quick and current ratios measure liquidity, while gross profit ratio measures profitability.

Which of the Following Ratios Are Used as an Indicator