Which of the Following Is a Warning Indicator of a Potential

question 22

Multiple Choice

Which of the following is a warning indicator of a potential financial crisis?

• A) Transparency in government operations
• B) Floating exchange system
• C) Decline in foreign reserves
• D) All of the above are warning indicators

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Definitions:

Leverage Ratio

Leverage Ratio is a financial metric that measures the amount of debt used by a company to finance its assets, often indicative of the risk level of the company's financial structure.

Tax Burden

The total amount of taxes that an individual or business owes to the government, expressed as a percentage of income or revenue.

Interest Burden

The ratio of interest expenses to earnings before interest and taxes, indicating the proportion of a company's earnings consumed by interest payments.

Return On Sales

A financial ratio that calculates how efficiently a company turns sales into pretax profit.