Asked by Erika Cheng on May 02, 2024
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The more a company relies on long-term borrowing to finance its business activities,the lower its debt ratio and long-term solvency risk.
Long-term Borrowing
Debt obtained by a company with repayment terms extending beyond one year, used to finance the company's long-term investments and operations.
Debt Ratio
The debt ratio is a financial metric that compares a company's total liabilities to its total assets, indicating the proportion of a company’s assets that are financed by debt.
Solvency Risk
The risk that a company will not have enough funds to meet its long-term liabilities and financial commitments.
- Utilize comprehension of solvency, liquidity, and credit risk in the context of financial analytics.
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Learning Objectives
- Utilize comprehension of solvency, liquidity, and credit risk in the context of financial analytics.
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