Which of the following ratios would Mitchell use to determine if his firm was using its resources to ensure it can meet its financial commitments in the longer term? (A) Gross profit (B) Debt to equity (C) Return on owners' equity (D) Accounts receivable turnover - HSC - SSCE Business Studies - Question 10 - 2004 - Paper 1

To determine if his firm can meet its financial commitments in the long term, Mitchell should consider the Debt to Equity ratio. This ratio compares the total liabilities of the firm to its shareholders' equity, giving insight into the level of financial leverage and risk the firm is carrying. A higher ratio indicates greater risk as it implies that the firm is more heavily financed by debt than equity, which can affect its ability to meet long-term commitments. Therefore, the correct answer is (B) Debt to equity.