The Debt-Equity Ratio Is a Common Ratio Used to Assess

question 24

Multiple Choice

The debt-equity ratio is a common ratio used to assess a firm's ________.

• A) liquidity
• B) return on equity
• C) leverage
• D) retained earnings

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Definitions:

Nonexcludable Problem

An issue characteristic of public goods, where it is not possible to prevent individuals who do not pay from consuming a good or service.

Optimal Level

The most favorable or efficient level of output or activity under given conditions, maximizing benefits or minimizing costs.

Public Good

A good that is non-excludable and non-rivalrous, meaning it can be used by everyone and one person's use does not diminish another's.

Free-rider Problem

A situation where individuals consume a good without contributing to its cost, typically in the context of public goods.