Which of the Following Best Describes the Debt to Equity

question 191

Multiple Choice

Which of the following best describes the debt to equity ratio?

• A) Stockholders' equity divided by total liabilities
• B) Average total assets divided by stockholders' equity
• C) Average total assets divided by total liabilities
• D) Total liabilities divided by stockholders' equity

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Definitions:

Price-Earnings Ratio

A financial ratio that compares a company's market price per share to its earnings per share, indicating the value that investors place on a company's earning capacity.

Market Price

The price charged for an item on the open market.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Gross Margin Percentage

A profitability ratio that shows the percentage of sales revenue remaining after deducting the cost of goods sold, indicating the financial health and performance of a company's core activities.