Which of the Following Ratios Would Be the Best Measure

question 65

Multiple Choice

Which of the following ratios would be the best measure of profitability?

• A) Current ratio
• B) Debt-to-equity ratio
• C) Times-interest-earned ratio
• D) Return on assets

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Definitions:

Subprime Mortgages

These are home loans granted to borrowers with lower credit ratings, implying higher risk for the lender and typically coming with higher interest rates.

Down Payments

A down payment is the initial, upfront portion of the total amount due, often associated with the purchase of expensive items like a home or a car, which is not financed through a loan.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Investment Banks

Financial institutions that provide services such as underwriting, mergers and acquisitions, and advisory services to corporations and governments.