Asked by Chelsy Martin on May 26, 2024
Verified
If management wishes to evaluate the amount of assets which were financed by creditors, they could use the:
A) debt to total assets.
B) rate of return on common stockholders' equity.
C) debt to total liabilities.
D) times interest earned.
Debt to Assets
A financial ratio that measures the proportion of a company’s total debt to its total assets, indicating the degree of leverage.
Financed by Creditors
A phrase indicating that a portion of a company's funding or assets has been obtained through borrowing from lenders.
Total Assets
The sum of all owned resources (assets) that have economic value which a company or individual possesses.
- Compute the ratios of debt to total assets and debt to stockholders' equity, and comprehend their significances.
Verified Answer
NA
Nurul ArdianMay 28, 2024
Final Answer :
A
Explanation :
The debt to total assets ratio is used to evaluate the amount of assets financed by creditors, as it measures the proportion of a company's assets that are financed by debt.
Learning Objectives
- Compute the ratios of debt to total assets and debt to stockholders' equity, and comprehend their significances.