The Debt Ratio Is Used

question 213

Multiple Choice

The debt ratio is used:

• A) To determine how much debt a firm should pay off.
• B) To measure the ratio of equity to expenses.
• C) To determine how much debt a company should borrow.
• D) To assess the risk associated with a company's use of liabilities.
• E) Only by banks when a business applies for a loan.

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Definitions:

Linear Risks

Risks that increase or decrease directly in proportion to changes in market factors or exposure levels.

Prices

The amount of money required to purchase goods or services, dictated by factors such as supply and demand, production cost, and market competition.

Credit Policy

A set of guidelines that a company uses to determine the credit terms for its customers, including terms of payment and who is extended credit.

Exchange Rates

The price at which one currency can be exchanged for another currency in the forex market.