Which of the Following Ratios and Rates That Measure Debt-Paying

question 110

Multiple Choice

Which of the following ratios and rates that measure debt-paying ability focuses on the long-term position of a company?

• A)Quick ratio
• B)Inventory turnover
• C)Current ratio
• D)Debt ratio

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Definitions:

Preferred Shares

A class of ownership in a corporation that has a higher claim on the company's assets and earnings than common shares, usually with fixed dividends.

Share Capital

The total value of a company's shares of stock that have been issued to shareholders.

Retained Earnings

The portion of net earnings not distributed as dividends to shareholders, but retained by the company to reinvest in its core business or to pay debt.

Contributed Surplus

Contributed Surplus is an equity account that reflects excess amounts received by a company over the par value of its stock from the sale of shares directly to investors.