Question

Hevron Hrist, a multinational company, finances itself each year by procuring 25 percent of its yearly budget through loans from banks. The remaining budget is covered by the company itself. The given scenario suggests that the firm most likely relies on measuring _____ to decide its capital structure.

Answer 1

B. Leverage ratios

Step-by-step explanation:

Leverage ratios are ratios used in measuring the amount of debt and the capacity of an organization to meet its financial obligation. It is the proportion of debts owed by a business entity compared to its equity/capital. It is used to indicate the amount of debt a business has incured. There are many form of leverage ratios. We have the debt to equity ratio, debt to capital ratio and so on.