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The ________ ratios help determines the degree of financial risk and earnings volatility present in a firm.

  • The debt utilization ratios help determines the degree of financial risk and earnings volatility present in a firm.
  • The debt utilization ratios allow the analyst to measure the prudence of the debt management policies of the company.
  • Total debt to total assets indicates the percentage of assets that are financed by debt.
  • The higher the number, the more financial leverage the company employs and the more volatile the earnings can be if it is subject to cyclical sales or profit margins.
  • The debt-utilization ratios provide an indication of the way the firm is financed between debt ( lenders ) and equity ( owners ) and therefore help the analyst determine the amount of financial risk present in the firm.