Which of the Following Is True of the Debt Ratio

question 51

Multiple Choice

Which of the following is true of the debt ratio?

• A) It reflects ability to meet long-term financial obligations.
• B) It shows managers and investors how much return the organization is generating relative to its assets.
• C) It indicates how liquid an organization's assets are.
• D) It indicates the effectiveness of specific functional areas.
• E) It helps estimate the organization's ability to cover interest expenses on borrowed capital.

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Definitions:

Finalize Deal

To complete the negotiations and formal agreements of a business transaction, making it official and binding.

Asset Sale

The process of selling off individual assets of a company, such as real estate, machinery, or intellectual property, rather than transferring ownership of the company itself.

Asset Purchases

The acquisition of company assets, such as property, plant, and equipment, rather than the company's stock.

Liabilities

Financial obligations or debts that a company or an individual owes to others.