Which is not included in the group?Select one:a.net income to gross sales ratiob.debt to total asset ratioc.total capitalization ratiod.debt to equity ratio
Question
Which is not included in the group?Select one:a.net income to gross sales ratiob.debt to total asset ratioc.total capitalization ratiod.debt to equity ratio
Solution
The option that is not included in the group is a. net income to gross sales ratio. The reason is that options b. debt to total asset ratio, c. total capitalization ratio, and d. debt to equity ratio are all financial leverage ratios, which are used to evaluate a company's financial risk and its use of debt. On the other hand, a. net income to gross sales ratio is a profitability ratio, which is used to assess a company's ability to generate earnings compared to its expenses and other relevant costs. Therefore, it does not belong to the same group as the other options.
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