The Rate of Return on Total Assets Measures a Company's

question 107

Multiple Choice

The rate of return on total assets measures a company's ________.

• A) ability to meet its short-term obligations
• B) ability to repay its long-term debt
• C) success in using assets to earn income
• D) success in earning high returns on investments in stocks and bonds of other companies

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Definitions:

Debt To Total Assets Ratio

A financial metric indicating the proportion of a company's total assets that are financed by debt.

Times Interest Earned Ratio

A financial metric that compares a company's operating income to its interest expenses, used to evaluate its ability to meet its interest obligations.

Solvency

The ability of an entity to meet its long-term financial obligations and continue its operations indefinitely.