Leverage ratios assess risk from "summary" of Loose Leaf Finance with Connect Access Card by Troy Adair,Marcia Millon Cornett,John Nofsinger
Leverage ratios are important tools for assessing risk in a company. These ratios provide insight into how much debt a company is using to finance its operations, which can help investors and analysts evaluate the financial health and stability of the firm. By analyzing leverage ratios, stakeholders can better understand the level of risk associated with investing in a particular company. One commonly used leverage ratio is the debt-to-equity ratio, which compares a company's total debt to its shareholders' equity. A high debt-to-equity ratio indicates that a company is relying heavily on debt to finance its operations, which can be risky because it mean...
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