The ratios which measure the relative contribution of financing by owners and financing provided by outsiders are called:

The correct answer is: B. Leverage ratios.

Leverage ratios measure the relative contribution of financing by owners and financing provided by outsiders. They are used to assess the risk of a company and its ability to repay its debts.

• Liquidity ratios measure a company’s ability to meet its short-term obligations.
• Activity ratios measure how efficiently a company uses its assets.
• Profitability ratios measure a company’s ability to generate profits.

Here are some examples of leverage ratios:

• Debt-to-equity ratio: This ratio measures the amount of debt a company has relative to its equity. A high debt-to-equity ratio indicates that a company is highly leveraged, which means that it is using a lot of debt to finance its operations. This can be risky, as a company with a high debt-to-equity ratio may have difficulty repaying its debts if its profits decline.
• Debt-to-assets ratio: This ratio measures the amount of debt a company has relative to its total assets. A high debt-to-assets ratio indicates that a company is highly leveraged, which means that it is using a lot of debt to finance its operations. This can be risky, as a company with a high debt-to-assets ratio may have difficulty repaying its debts if its profits decline.
• Times interest earned ratio: This ratio measures a company’s ability to pay its interest expenses. A high times interest earned ratio indicates that a company is able to easily pay its interest expenses, even if its profits decline.
• Debt service coverage ratio: This ratio measures a company’s ability to meet its debt service obligations, which include both interest and principal payments. A high debt service coverage ratio indicates that a company is able to easily meet its debt service obligations, even if its profits decline.