Which of the following ratios is used to evaluate solvency?
A)Fixed asset turnover ratio
B)Days to sell ratio
C)Current ratio
D)Times interest earned

Question

Quizplus · Accepted Answer

Solvency ratios measure the company's ability to survive long enough to repay lenders when debt matures and to make the required interest payments prior to the date of maturity.Debt-to-assets is a solvency ratio.Times interest earned is a solvency ratio.Fixed asset turnover is a profitability ratio.The days to sell and current ratios are liquidity ratios

Which of the Following Ratios Is Used to Evaluate Solvency