Which of the following class(es)of ratios examines the relationship of borrowed funds to funds contributed by the equity holders and the ability of the firm to service its existing borrowings?
A)Profitability and activity ratios
B)Leverage and coverage ratios
C)Liquidity ratios
D)All of the above

Question

Quizplus · Accepted Answer

Leverage and coverage ratios examine the relationship of borrowed funds to funds contributed by the equity holders and the ability of the firm to service its existing borrowings. Profitability and activity ratios focus on the firm's profitability and efficiency, while liquidity ratios assess the firm's ability to meet its short-term obligations. Therefore, the best choice is B.

Which of the Following Class(es)of Ratios Examines the Relationship of Borrowed