A solvency ratio is an activity ratio that measures the average number of times inventory is sold and restocked during the year.

Name: A solvency ratio is an activity ratio that measures the average number of times inventory is sold and restocked during the year.
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Question

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A solvency ratio measures a company's ability to meet its long-term debts, while the description given is for an inventory turnover ratio, which is an activity ratio.

A Solvency Ratio Is an Activity Ratio That Measures the Average