Question

    The Debt/Equity ratio is a crucial metric in financial

    analysis. What core aspect of a company's financial health does this ratio assess?
    A Operational efficiency Correct Answer Incorrect Answer
    B Liquidity position Correct Answer Incorrect Answer
    C Solvency Correct Answer Incorrect Answer
    D Return on investment Correct Answer Incorrect Answer
    E Asset turnover Correct Answer Incorrect Answer

    Solution

    This ratio is vital for evaluating a company's long term solvency by comparing its total long term liabilities to shareholders' equity, indicating the extent to which it is financing its operations through debt.

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