Financial policy is evaluated by which of the following?
Correct answer: C. Debt-equity ratio
- A. Profit Margin
- B. Total Assets Turnover
- C. Debt-equity ratio
- D. None of the given options
Explanation
The debt-equity ratio evaluates financial policy by showing the relative use of borrowed funds and owners' funds. Profit margin and total asset turnover mainly assess profitability and asset-use efficiency, respectively.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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