If an analyst wished to determine the degree to which leverage was being employed by a subject company, she would most likely examine that issuer's:______.
a) sales to debt ratio.
b) debt to equity ratio.
c) current ratio.
d) price to book ratio.
The debt to equity ratio is computed by dividing the issuer's long-term debt by their total capitalization. The higher the ratio, the more leverage being used by the company.
