_____ ratios measure the relative risk that a business setback could cause bankruptcy.

Question

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Leverage ratios, such as debt-to-equity or interest coverage ratios, measure the amount of debt a company has relative to its equity or its ability to pay its interest expenses. If a company has a high level of debt compared to its equity or struggles to cover its interest payments, it is at a higher risk of bankruptcy if it experiences a setback. Therefore, leverage ratios measure the relative risk of business setbacks leading to bankruptcy.

_____ Ratios Measure the Relative Risk That a Business Setback