Which of the Following Ratios Give a Perspective on Risk

question 15

Multiple Choice

Which of the following ratios give a perspective on risk in the capital structure?

• A) Book value per share
• B) Price/earnings ratio
• C) Degree of financial leverage
• D) Dividend yield

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Definitions:

Journalize Transactions

The process of recording financial transactions in the journal as part of the accounting cycle.

Accounts Receivable Turnover

A financial ratio that measures how many times a company can turn its accounts receivable into cash during a period.

Days' Sales in Receivables

A financial metric that calculates the average number of days it takes a company to collect payment after a sale has been made.

Dishonored Note

A promissory note that has not been paid by the maker at its maturity date.