Which ratio would you assess for a company's risk and creditworthiness regarding long-term debt?

The Long-term Debt Ratio is an essential measure for assessing a company's risk and creditworthiness in relation to its long-term debt. This ratio indicates the proportion of a company's long-term debt in relation to its total assets, which helps stakeholders understand how much of the company is funded through debt. A higher Long-term Debt Ratio suggests that a company relies significantly on borrowed funds to finance its operations, which may increase financial risk and thus affect its creditworthiness. Lenders and investors often use this ratio to evaluate the sustainability of a company’s capital structure and its ability to meet long-term obligations.

In contrast, other ratios like the Quick Ratio and Current Ratio primarily focus on liquidity and the company’s short-term financial health rather than its long-term debt profile. The Debt-to-Equity Ratio does provide insight into a company's leverage, but it does not specifically isolate long-term debt as a factor in relation to total assets. Therefore, the Long-term Debt Ratio is the most appropriate metric for assessing a company's risk and creditworthiness relating to long-term debt obligations.