The debt ratio is used:
A)To measure the amount of equity relative to the expenses.
B)To reflect the risk associated with a company's debts.
C)Only by banks when a business applies for a loan.
D)To determine how much debt a firm should pay off.
E)To determine who a company owes.

Question

Quizplus · Accepted Answer

The debt ratio is used to reflect the risk associated with a company's debts. It measures the proportion of a company's total assets that have been financed with debt, indicating how much of the company's assets are at risk of being claimed by creditors in the event of default.

The Debt Ratio Is Used