Question

If an analyst wished to determine the degree to which leverage was being employed by a subject company, she would most likely examine that issuer's:______.

a) sales to debt ratio.
b) debt to equity ratio.
c) current ratio.
d) price to book ratio.

Answer 1

B) debt to equity ratio.

Explanation

The debt to equity ratio is computed by dividing the issuer's long-term debt by their total capitalization. The higher the ratio, the more leverage being used by the company.

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