Accounting for IGCSE & O level - Advanced Principles (Section 9 - No. 1)
A company's ability to meet its long-term financial obligations is directly related to what?
Its liquidity ratios.
Its profitability ratios.
Its gearing ratios.
Its dividend payouts.
Explication
Gearing ratios, (also known as leverage ratios), are the most useful in determining whether a company has sufficient equity to cover its debts.