Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which type of ratios measure the degree to which a firm relies on borrowed funds in its operations?

Activity ratios

Leverage ratios

Liquidity ratios

Profitability ratios

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Verified step by step guidance

Understand the question: The problem is asking about the type of financial ratios that measure how much a company depends on borrowed funds (debt) to finance its operations.

Review the options provided: The options are Activity ratios, Leverage ratios, Liquidity ratios, and Profitability ratios. Each type of ratio serves a specific purpose in financial analysis.

Define the key term 'Leverage ratios': Leverage ratios are financial metrics that assess the extent to which a company uses debt (borrowed funds) relative to its equity or assets. These ratios help evaluate the financial risk and capital structure of the firm.

Compare the other options: Activity ratios measure operational efficiency, Liquidity ratios assess a firm's ability to meet short-term obligations, and Profitability ratios evaluate a firm's ability to generate profit. None of these directly measure reliance on borrowed funds.

Conclude that the correct answer is Leverage ratios, as they specifically measure the degree to which a firm relies on borrowed funds in its operations.