Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?
A)market debt-equity ratio
B)current or quick ratio
C)debt-equity or equity multiplier ratio
D)market-to-book ratio

Question

Quizplus · Accepted Answer

The debt-equity or equity multiplier ratio is the best choice to measure the financial health of a firm by assessing its leverage. This ratio compares the amount of debt a company has taken on to the amount of equity it holds. A higher ratio may indicate higher risk, as it means the company has taken on more debt.

Which Ratio Would You Use to Measure the Financial Health