Which of the following ratios can be used to evaluate an entity's capital structure?
A)Current ratio
B)Debt-to-equity
C)Interest-coverage ratio
D)Return-on-assets

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is the most appropriate ratio for evaluating an entity's capital structure, as it measures the proportion of debt and equity financing that the entity is using. The current ratio measures short-term liquidity, the interest-coverage ratio measures the entity's ability to pay interest on its debt, and the return-on-assets ratio measures the entity's profitability in relation to its assets. While these ratios may be useful in evaluating other aspects of the entity's financial performance, they do not specifically relate to its capital structure.

Which of the Following Ratios Can Be Used to Evaluate