Which of the Following Ratios Is Used to Measure a Firm's

question 19

Multiple Choice

Which of the following ratios is used to measure a firm's leverage?

• A) Net income ¸ Equity
• B) Sales ¸ Assets
• C) Assets ¸ Equity
• D) Net income ¸ Sales

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Definitions:

Utility Function

An economic tool used to encode a consumer's preference orderings over a set of alternatives into a real-valued function. (Duplicate rephrase)

Income

Funds obtained regularly as a result of employment or from returns on investments.

Cobb-Douglas Utility Function

A form of utility function that represents preferences of consumers for various goods, showcasing how they allocate their spending based on the utility derived from each good, typically in the form of \(U(x,y) = x^a y^b\) where \(x\) and \(y\) are quantities of goods and \(a\) and \(b\) are positive constants.

Inverse Demand Function

A mathematical function that expresses price as a function of quantity demanded, illustrating how the price necessary to sell a given quantity changes.