Financial strength/solvency ratios include:
A) Return on shareholders funds, asset turnover and gross profit ratio
B) Stock turnover ratio, debtor ratio and creditor ratio
C) Price earnings ratio, dividend cover and dividend yield
D) Current ratio, quick ratio and capital gearing ratio

Question

Quizplus · Accepted Answer

The financial strength/solvency ratios are used to assess a company's ability to meet its financial obligations in the long-term. The ratios included in option D, such as the current ratio, quick ratio and capital gearing ratio, are all widely used measures of a company's financial strength and ability to meet its long-term obligations. Options A, B and C contain ratios that are more focused on profitability and valuation, rather than solvency.

Financial Strength/solvency Ratios Include