Ratio of Equity To Capital Employed - SS2 Accounting Past Questions and Answers - page 1
1
What does the ratio of equity to capital employed measure?
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A
The total funds invested in the business
B
The proportion of equity in relation to total assets
C
The funds needed to support day-to-day operations
D
The ratio of debt to equity
2
What does a higher ratio of equity to capital employed suggest about a company?
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A
The company has a lower level of financial risk
B
The company is experiencing financial distress
C
The company has more of its capital financed by debt
D
The company is less profitable
3
Why is the ratio of equity to capital employed important for investors and analysts?
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A
To assess a company's financial health
B
To evaluate a company's marketing strategy
C
To understand a company's customer base
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D
To measure a company's employee productivity
4
What is equity financing?
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A
The value of a company's assets minus its liabilities
B
Borrowing money from banks or other financial institutions
C
Raising funds by selling shares of ownership in a company
D
The total funds invested in the business
5
What is the significance of a higher ratio of equity to capital employed for a company?
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6
How can the ratio of equity to capital employed help investors and analysts in their decision-making process?
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