Which use of ratio analysis assists organizations in deciding their debt burden capacity?

The correct answer is centered on the importance of assessing debt capacity through ratio analysis. Ratio analysis involves calculating financial ratios that provide insights into a company's financial health, performance, and operational efficiency. When it comes to determining the capacity to bear debt, key ratios like the debt-to-equity ratio, interest coverage ratio, and debt service coverage ratio come into play.

These ratios help organizations understand their existing debt levels in relation to their equity and cash flow. By evaluating these ratios, management can determine how much additional debt the organization can take on without jeopardizing its financial stability. This assessment is crucial for making informed decisions regarding strategic investments, expansion, or operational adjustments.

Other options, while relevant to financial management, focus on different areas. Assessing short- and long-range financial plans relates more to overall financial planning rather than specifically addressing debt capacity. Monitoring debt covenant compliance involves ensuring that the organization adheres to conditions set by lenders but does not inherently evaluate the ability to carry more debt. Pricing of services is unrelated to debt analysis, as it pertains to determining how to set prices to cover costs and achieve profitability, rather than evaluating financial leverage.