Which Ratio Would You Use to Measure the Financial Health

question 120

Multiple Choice

Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?

• A)debt-equity or equity multiplier ratio
• B)market-to-book ratio
• C)market debt-equity ratio
• D)current or quick ratio
• E)price-to-book ratio

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Definitions:

Future Value

The amount of money an investment is expected to grow to over a period of time when interest or dividends are reinvested.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Salvage Value

The estimated resale value of an asset at the end of its useful life.