
Which financial ratio measures the proportion of a company’s debt financing relative to its shareholders’ equity?
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Get StartedWhich financial ratio measures the proportion of a company’s debt financing relative to its shareholders’ equity?
Options:
- Debt‑to‑equity ratio
- Current ratio
- Return on assets (ROA)
- Gross profit margin
Correct answer: Debt‑to‑equity ratio
Explanation: The debt‑to‑equity ratio equals total liabilities divided by shareholders' equity; for example, a ratio of 1.5 means $1.50 of debt for each $1.00 of equity.
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