BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Liquidity
|
|
|
Asset utilization
|
|
|
Debt-Utilization
|
|
|
Profitability
|
Detailed explanation-1: -The answer is A. The debt utilization ratios will measure the efficiency in using debts for the core business. It measures the degree of debt to firm’ assets or the relationship between debt and shareholder’s equity.
Detailed explanation-2: -The debt-to-total assets ratio is primarily used to measure a company’s ability to raise cash from new debt. That evaluation is made by comparing the ratio to other companies in the same industry. The higher a company’s debt-to-total assets ratio, the more it is said to be leveraged.
Detailed explanation-3: -Liquidity ratios tell you about a company’s ability to meet all its financial obligations, including debt, payroll, payments to vendors, taxes, and so on. The numbers come from the Balance Sheet. The current ratio is one of the liquidity ratios. It measures a company’s ability to pay its short-term obligations.
Detailed explanation-4: -Capital structure refers to the specific mix of debt and equity used to finance a company’s assets and operations.