The Ratio That Reflects the Mix of Sources of Financing

question 71

Multiple Choice

The ratio that reflects the mix of sources of financing for a company is the

• A) Current ratio
• B) Debt-to-equity ratio
• C) Price-earnings ratio
• D) Times interest earned ratio

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Definitions:

Net Benefits

The total positive effects or gains from a decision or action minus any negative effects or costs associated with it.

Prospect Theory

A behavioral economics theory of preferences having three main features: (1) people evaluate options on the basis of whether they generate gains or losses relative to the status quo; (2) gains are subject to diminishing marginal utility, while losses are subject to diminishing marginal disutility; and (3) people are prone to loss aversion.

Salary

A form of payment from an employer to an employee, which may be specified in an employment contract.

Loss Averse

The behavioral tendency of individuals to prefer avoiding losses over acquiring equivalent gains, highlighting the emotional impact of loss.