Which of the following ratios is useful in evaluating a company's ability to pay its long-term obligations?

Question

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The debt-to-equity ratio is the most useful ratio in evaluating a company's ability to pay its long-term obligations as it shows the amount of debt the company has in relation to its equity. A higher debt-to-equity ratio indicates that the company has more debt than equity, which can make it more difficult to pay back long-term obligations. The current ratio, quick ratio, and cash ratio are all measures of a company's short-term liquidity and ability to pay its current obligations.

Which of the Following Ratios Is Useful in Evaluating a Company's