A solvency measure that focuses specifically on the extent to which a company relies on outsiders for funds is the
A)cash flow from operations to capital expenditures ratio.
B)debt service coverage ratio.
C)times interest earned ratio.
D)debt-to-equity ratio.

Question

Quizplus · Accepted Answer

The debt-to-equity ratio measures the proportion of a company's financing that comes from creditors (debt) compared to investors (equity). This ratio shows how much a company is relying on external sources of funding rather than their own earnings and investment. A higher debt-to-equity ratio indicates a higher level of debt and, therefore, a higher risk for the company.

A Solvency Measure That Focuses Specifically on the Extent to Which