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    Question

    The leverage ratio is a critical financial metric used

    to assess a company's financial health. It is generally calculated using which of the following formulas?
    A Total Debt / Total Assets Correct Answer Incorrect Answer
    B Total Debt / Total Equity Correct Answer Incorrect Answer
    C Total Equity / Total Debt Correct Answer Incorrect Answer
    D Total Assets / Shareholder’s Equity Correct Answer Incorrect Answer
    E EBIT / Interest Expense Correct Answer Incorrect Answer

    Solution

    The leverage ratio measures the extent to which a company uses debt to finance operations. A higher ratio indicates greater financial risk.

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