The Debt Ratio Is Used for Which Kind of Evaluation

question 151

Multiple Choice

The debt ratio is used for which kind of evaluation?

• A) The ability of a company to pay its current liabilities
• B) The ability of a company to pay its long-term liabilities
• C) The overall profitability of a company
• D) Evaluating stock in a company from an investor's perspective

---

Definitions:

Unforeseen Circumstances

Situations or events that could not have been predicted or expected, often leading to disruptions in agreements or plans.

Preexisting Duty Rule

A legal principle stating that an existing contractual obligation cannot serve as consideration for a new contract.

Bilateral Contract

A bilateral contract is a mutually binding agreement in which each party makes a promise to the other, such as a promise to perform a service in exchange for payment.

Illusory Promise

Describes a statement or agreement that appears to be a promise but is too vague or has terms that allow the promisor to avoid any real obligation.