Which of the following ratios is least useful in evaluating a company's ability to pay its current debts as they become due?
A) current ratio
B) debt-to-equity ratio
C) debt service coverage ratio
D) acid-test ratio

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is not specifically designed to evaluate a company's ability to pay its current debts, but rather to determine the amount of leverage a company is using in relation to its equity. The other ratios listed are all focused on assessing a company's liquidity and ability to meet short-term obligations.

Which of the Following Ratios Is Least Useful in Evaluating