The Ability of a Company to Pay Its Debts Can

question 159

Multiple Choice

The ability of a company to pay its debts can be evaluated by using the ________.

• A) earnings per share
• B) return on assets ratio
• C) debt ratio
• D) fully diluted earnings per share

---

Definitions:

Loss on Disposal

The financial loss recognized when the selling price of an asset is less than its carrying amount on the balance sheet.

Operating Expenses

Expenses incurred in the normal operations of a business, including costs such as rent, salaries, and utilities, but not including cost of goods sold.

Operating Revenues

Income generated from a company's primary business activities, excluding income from investments or secondary operations.

Interest Expense

The financial liability incurred from borrowing funds that an entity faces over a predetermined period.