Question

which of the following statements about the debt to total assets ratio is true? question 1 options: a) it is calculated by dividing market price per share by basic earnings per share. b) it is calculated by dividing gross profit by net sales. c) it is used to evaluate a company's solvency and long-term debt-paying ability. d) it is used to evaluate a company's liquidity and short-term debt-paying ability

Answer 1

The debt to total assets ratio is used to evaluate a company's solvency and long-term debt-paying ability.

Step-by-step explanation:

The correct statement about the debt to total assets ratio is option c) it is used to evaluate a company's solvency and long-term debt-paying ability.

The debt to total assets ratio is used to determine the proportion of a company's total assets that are financed by debt. It is calculated by dividing the total debt of a company by its total assets. This ratio is used by investors and creditors to assess a company's ability to meet its long-term debt obligations.