The correct answer is A. Debt equity ratio.
A leverage ratio is a measure of a company's financial leverage, which is the extent to which a company uses debt to finance its assets. The debt equity ratio is calculated by dividing a company's total debt by its total equity. A higher debt equity ratio indicates that a company is more leveraged, which means that it is using more debt to finance its assets. This can be a risky strategy, as it means that the company is more vulnerable to changes in interest rates and economic conditions. However, it can also be a way to increase a company's return on equity, as debt financing is generally cheaper than equity financing.
The current ratio is a measure of a company's liquidity, which is its ability to meet its short-term obligations. The current ratio is calculated by dividing a company's current assets by its current liabilities. A higher current ratio indicates that a company is more liquid, which means that it has more assets that can be easily converted into cash to meet its short-term obligations.
The quick ratio is a measure of a company's liquidity that is similar to the current ratio, but it excludes inventory from current assets. This is because inventory is often the least liquid of a company's current assets. A higher quick ratio indicates that a company is more liquid, which means that it has more assets that can be easily converted into cash to meet its short-term obligations.
Earning power is a measure of a company's profitability. It is calculated by dividing a company's net income by its average assets. A higher earning power indicates that a company is more profitable.
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