Which financial metric is often calculated to gauge a company's long-term viability?

The debt-to-equity ratio is a crucial financial metric that provides insight into a company’s long-term viability by assessing its financial leverage. This ratio compares the total liabilities of a company to its shareholders’ equity, indicating how much debt is used to finance the company’s assets relative to the equity provided by the shareholders. A higher debt-to-equity ratio suggests that a company is more leveraged, meaning it relies more on borrowed funds, which can lead to increased risk in times of economic downturns.

By assessing the debt-to-equity ratio, stakeholders can deter mine the risk level associated with the company’s capital structure. If a company has a manageable level of debt, it may indicate strong long-term viability, as it can finance its operations and growth without over-relying on borrowing. In contrast, too much debt compared to equity might signal potential solvency issues in the future.

Other metrics like market capitalization, operating cash flow, and net profit margin, while informative, measure different aspects of a company’s performance. Market capitalization gauges the company's market value, operating cash flow assesses short-term liquidity, and net profit margin focuses on profitability. Each of these metrics provides valuable information, but they do not directly evaluate long-term solvency and capital structure in