Which of the following ratios do FIs and regulators often use as a simple measure of solvency?
A)Current ratio.
B)Capital to assets.
C)Earnings before interest and taxes to total assets.
D)Quick ratio.
E)Asset turnover ratio.

Question

Quizplus · Accepted Answer

Capital to assets ratio is often used as a simple measure of solvency by FIs and regulators because it indicates the proportion of assets that are supported by capital rather than debt. A higher ratio indicates a stronger solvency position, as there is more capital available to cover potential losses.

Which of the Following Ratios Do FIs and Regulators Often