Which of the following ratios examines an organization's use of debt to finance its assets and its ability to meet the interest payments on the debt?
A) leverage ratios
B) activity ratios
C) conformance ratios
D) liquidity ratios

Question

Quizplus · Accepted Answer

Leverage ratios examine an organization's use of debt to finance its assets and its ability to meet the interest payments on the debt. Activity ratios measure how efficiently a company uses its assets to generate revenue, conformance ratios measure a company's adherence to regulatory and industry standards, and liquidity ratios assess a company's ability to meet short-term obligations.

Which of the Following Ratios Examines an Organization's Use of Debt