The debt ratio is used for which kind of evaluation?
A) The ability of a company to pay its current liabilities
B) The ability of a company to pay its long-term liabilities
C) The overall profitability of a company
D) Evaluating stock in a company from an investor's perspective

Question

Quizplus · Accepted Answer

The debt ratio is used to assess the ability of a company to pay its long-term liabilities by comparing a company's total liabilities to its total assets. A higher debt ratio indicates that a larger portion of the company's assets are financed through debt, which may increase the company's financial risk.

The Debt Ratio Is Used for Which Kind of Evaluation