Which Ratio Would You Use to Measure the Financial Health

question 12

Multiple Choice

Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?

• A) debt-equity or equity multiplier ratio
• B) market-to-book ratio
• C) market debt-equity ratio
• D) current or quick ratio

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Definitions:

Directional

Pertaining to or indicating the direction of something, often used in the context of research to suggest a specific trend or relationship.

Research Hypothesis

A statement predicting a significant relationship or difference between two or more variables in a study.

Prediction

The act of making informed guesses about the future values or occurrences based on current data or trends.

Scientific Method

Method of investigation that uses the objective and systematic collection and analysis of empirical data to test theories and hypotheses.