Which one of the following is a measure of long-term solvency?
A)Price-earnings ratio
B)Profit margin
C)Equity multiplier
D)Receivables turnover
E)Quick ratio

Question

Quizplus · Accepted Answer

The equity multiplier measures the degree to which a company relies on debt financing to support its assets. It is calculated by dividing total assets by total equity. A high equity multiplier indicates a greater reliance on debt and therefore may signal a higher level of long-term solvency risk.

Which One of the Following Is a Measure of Long-Term