Which ratio would you use to measure the financial health of a firm by assessing that firm's leverage?
A)debt-equity or equity multiplier ratio
B)market-to-book ratio
C)market debt-equity ratio
D)current or quick ratio
E)price-to-book ratio

Question

Quizplus · Accepted Answer

The debt-equity ratio or equity multiplier ratio is commonly used to measure the financial health of a firm by assessing its leverage, as it compares the amount of debt a firm has to its equity. This ratio indicates the proportion of a company's financing that comes from debt versus equity, which can give insights into the level of risk associated with the firm's capital structure.

Which Ratio Would You Use to Measure the Financial Health