The Ratio That Measures the Percentage of Financing from Creditors

question 163

Multiple Choice

The ratio that measures the percentage of financing from creditors is the:

• A)current ratio.
• B)times interest earned ratio.
• C)debt-to-assets ratio.
• D)Price/Earnings ratio.

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Definitions:

Nominal Interest

The stated interest rate on a loan or investment, not accounting for inflation or compounding effects.

Compounded Nominal

Refers to the nominal interest rate which is compounded at certain intervals over a specified period but not necessarily reflecting the actual annual rate of return.

Annuity

An annuity is a financial instrument that provides a consistent series of payments to a person, often serving as a source of income for those who have retired.

Annuitant

The individual entitled to receive payments from an annuity contract, usually during retirement.