Which measure focuses on the relationship of long-term debt to stockholders' equity?

The measure that focuses on the relationship of long-term debt to stockholders' equity is the debt-to-equity ratio. This financial metric is essential in assessing a company's financial leverage and capital structure. Specifically, it is calculated by dividing the company's total long-term debt by its total stockholders' equity, providing insight into how much debt is being used to finance the company's assets relative to the equity investors have put in.

A higher debt-to-equity ratio indicates that a company is relying more on borrowed funds to finance its operations compared to equity, which can signal higher risk in the eyes of investors and creditors. Conversely, a lower ratio may suggest that a company is using less debt, potentially leading to greater financial stability but possibly limiting growth opportunities.

In contrast, the debt ratio measures total liabilities relative to total assets, while total asset turnover focuses on how effectively a company utilizes its assets to generate sales. The average collection period evaluates how long it takes a company to collect payment after a sale. These other measures do not specifically target the relationship between long-term debt and stockholders' equity, thus making the debt-to-equity ratio the most relevant choice for this particular question.