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