Which of the Following Ratios Is Least Useful in Evaluating

question 179

Multiple Choice

Which of the following ratios is least useful in evaluating a company's ability to pay its current debts as they become due?

• A)Current ratio
• B)Debt-to-equity ratio
• C)Debt service coverage ratio
• D)Acid-test ratio

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Definitions:

Departmental Overhead Rates

Specific rates used to allocate overhead costs to different departments within a company based on varying criteria.

Machine Hours

represent a measure of the amount of time a machine is in operation, used in costing to allocate expenses based on the use of machinery.

Departmental Overhead Rate

A method to allocate overhead costs to specific departments based on certain criteria, such as machine hours or labor costs.

Direct Labor Hours

The total hours worked by employees directly involved in producing goods or services.