Financial Leverage Is Best Measured by Which of the Following

question 2

Multiple Choice

Financial leverage is best measured by which of the following ratios?

• A)The debt to equity ratio.
• B)The return on equity ratio.
• C)The times interest earned ratio.
• D)The return on assets ratio.

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Definitions:

Comparative Statement

A financial analysis tool that compares two or more financial statements to identify trends or changes over a period.

Financial Position

A snapshot of the assets, liabilities, and equity of a company at a specific point in time.

Net Increase

The difference between the current period's figure and the previous period's figure when the current period's figure is larger.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.