QUESTION IMAGE
Question
ratios that measure a companys ability to manage its long-term debt are _______.
○ efficiency ratios
○ leverage ratios
○ profitability ratios
○ liquidity ratios
Brief Explanations
To solve this, we analyze each option:
- Efficiency ratios measure how well a company uses its assets.
- Leverage ratios assess a company's long - term debt - managing ability (they show the proportion of debt to equity and the company's capacity to meet long - term obligations).
- Profitability ratios focus on a company's earnings.
- Liquidity ratios measure short - term debt - paying ability.
So the correct option is the one related to long - term debt management, which is leverage ratios.
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B. leverage ratios