What kind of information does a company's debt ratio provide?
A) What proportion of the company's debts are long-term liabilities
B) What proportion of the company's assets are financed by debt, as opposed to equity
C) How well a company is positioned to pay off all of its long-term debt
D) How much profit is generated by each share of stock

Question

Quizplus · Accepted Answer

The debt ratio provides information on the proportion of a company’s assets that are financed by debt rather than equity. The higher the debt ratio, the more heavily the company is relying on debt to finance its operations, which can indicate increased financial risk.

What Kind of Information Does a Company's Debt Ratio Provide