Which Group of Ratios Might Be Most Interesting to Potential

question 19

Multiple Choice

Which group of ratios might be most interesting to potential creditors of a firm?

• A) asset utilization ratios
• B) profitability ratios
• C) leverage ratios
• D) market value ratios

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Definitions:

Bargaining Power

The relative capacity of parties in a negotiation to exert influence over each other, often influencing the terms and conditions of agreements.

Dominant Firms

Companies that have a major share of the market sales or exert significant influence in their industry.

Contestable Market

A market structure where there are no barriers to entry or exit, and hence, firms face potential competition.

Exceeds Marginal Cost

The condition where the revenue received from the sale of an additional unit of output is greater than the cost required to produce that additional unit.