You are considering an investment in IBM stock and wish to assess the firm's long-term debt-paying ability and its use of debt financing.All of the following ratios can be used to assess solvency except:
A)Number of times interest is earned.
B)Debt to assets ratio.
C)Debt to equity ratio.
D)Net margin.

Question

Quizplus · Accepted Answer

Solvency ratios are used to analyze a company's long-term debt-paying ability and its financing structure.Solvency ratios include the debt to assets ratio,the debt to equity ratio,the number of times interest earned,and the plant assets to long-term liabilities ratio.The net margin ratio describes the percentage of each sales dollar remaining after subtracting other expenses as well as cost of goods sold.It is used to assess managerial effectiveness.

You Are Considering an Investment in IBM Stock and Wish