Which ratio most directly indicates the extent of the company's reliance on financial leverage?

Multiple Choice

Debt to equity.

Return on shareholders' equity.

Times interest earned.

Current ratio.

The acid$-$test ratio excludes which of the following elements from the numerator?

Multiple Choice

Inventories.

Receivables.

Short$-$term investments.

Cash equivalents.

For a firm with a current ratio of $2\mathrm{.}0,$ which of the following transactions would most likely cause the ratio to decrease?

Multiple Choice

The purchase of inventory on account.

The sale of a building for cash.

The collection of cash from customers on account.

The issuance of capital stock for cash.