The debt ratio is used:
A)To measure the ratio of equity to expenses.
B)To assess the risk associated with a company's use of liabilities.
C)To assess market expectations for future growth.
D)To determine how efficient the company is using its assets.
E)To determine the profitability of a company.

Question

Quizplus · Accepted Answer

The debt ratio is used to assess the risk associated with a company's use of liabilities. It measures the amount of debt a company has in relation to its assets, indicating the level of financial risk a company is exposed to. Higher debt ratios suggest that a company is more reliant on borrowed funds and may have difficulty meeting its financial obligations.

The Debt Ratio Is Used