The debt-to-equity 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-to-equity ratio is used to evaluate a company's ability to pay its long-term liabilities. It shows the proportion of debt financing to equity financing, which is useful for determining the financial risk of a company. A higher debt-to-equity ratio indicates that a company has more debt and may be at greater risk of defaulting on its loans.

The Debt-To-Equity Ratio Is Used for Which Kind of Evaluation