Question

Which ratio shows the proportion of equity and debt a company is using to finance its assets and the extent to which shareholder's equity can fulfill obligations to creditors in the event of a business decline?

• A. Current ratio
• B. Inventory turnover ratio
• C. Debt equity ratio
• D. None of these

Answer 1

The correct option is C

Debt equity ratio

Debt Equity ratio shows the proportion of equity and debt a company is using to finance its assets and the extent to which shareholder's equity can fulfill obligations to creditors in the event of a business decline .