When Only Equity Counts as Capital, the Leverage Measure Is

question 4

Multiple Choice

When only equity counts as capital, the leverage measure is

• A)equal to the capital ratio.
• B)equal to return on assets.
• C)the inverse of return on assets.
• D)assets divided by equity.

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Definitions:

Financial Condition

The status of an organization or individual's financial health, typically assessed through analysis of assets, liabilities, income, and expenditures.

Future

The time period that is to come, which is uncertain and yet to be determined.

Activity Ratios

Financial ratios that measure the speed with which various asset accounts are converted into sales or cash.

Asset Usage

Refers to how effectively a business utilizes its resources, including physical assets, to generate revenue or achieve its objectives.