A company's long-term solvency
A) can be measured by the gross profit percentage.
B) depends on the success of its operations and on its ability to raise capital for expansion.
C) can be measured by the days to collect receivables ratio.
D) depends on its ability to generate cash for the payment of dividends.

Question

Quizplus · Accepted Answer

A company's long-term solvency depends on its ability to generate enough profits to sustain its operations and growth, as well as its ability to raise capital for expansion. The gross profit percentage and days to collect receivables ratio are both important financial metrics, but they do not provide a comprehensive picture of a company's long-term solvency. The payment of dividends, while important for shareholder satisfaction, is not directly related to a company's solvency.

A Company's Long-Term Solvency