Which of the following ratios measures a firm’s financial risk?

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Vinod Jetley
25-March-2015

(a) Profitability (b) Liquidity (c) Activity (d) Leverage (e) Return on investment.

General Business Administration Business Development Management

Question added by Vinod Jetley , Assistant General Manager , State Bank of India
Date Posted: 2015/04/18

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by Vinod Jetley , Assistant General Manager , State Bank of India

(d)

Leverage ratio’s indicate the firms financial risk. (a) Profitability ratios provide a firms overall economic performance (b) Liquidity ratios measure a firm’s capacity to meet its short-term financial obligations. (c) Activity ratios reflects a firm’s efficiency in resource utilization.

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by Nancy Refai , Health, safety and environmental management Trainer and consultant , Freelancer

It's the leverage ratio as it is one of several financial measurements that look at how much capital comes in the form of debt (loans), or assesses the ability of a company to meet financial obligations.

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