The debt-to-equity ratio measures:

A Profitability

B The proportion of a company total financing that comes from creditors versus shareholders

C Liquidity

D Asset turnover

✓ Correct Answer: Option B

D/E ratio = Total Liabilities / Total Equity. Higher ratio indicates more leverage. Important for assessing financial risk and capital structure decisions.

💡 Why is B) the correct answer?

The correct answer to the question "The debt-to-equity ratio measures:" is Option B: The proportion of a company total financing that comes from creditors versus shareholders.

The other options — A) Profitability, C) Liquidity, D) Asset turnover — are incorrect for this Pre-MBA Exam Prep question. As explained above: D/E ratio = Total Liabilities / Total Equity. Higher ratio indicates more leverage. Important for assessing financial risk and capital structure decisions.

📚 About This Pre-MBA Exam Prep Practice Question

This 2-level Pre-MBA Exam Prep question from the Accounting topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.

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The debt-to-equity ratio measures:

✓ Correct Answer: Option B

📚 About This Pre-MBA Exam Prep Practice Question

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