Which of the Following Ratios Is Computed by Dividing the Average

question 22

Multiple Choice

Which of the following ratios is computed by dividing the average total assets by the average owners' equity?

• A)equity multiplier
• B)debt-to-equity ratio
• C)current liabilities-to-total-debt ratio
• D)current ratio

---

Definitions:

Asset Impairments

The reduction in the book value of an asset when its fair market value falls below its carrying amount on the balance sheet.

Depreciation Methods

Various approaches used to allocate the cost of a tangible asset over its useful life, such as straight-line, declining balance, or units of production methods.

Accounting Changes

Accounting changes refer to alterations in accounting policies, estimates, or the reporting entity that significantly impacts a company's financial statements.

Service Life

Service life refers to the estimated period during which an asset is expected to be functional and economically usable.