The ability of a business to pay its debts as they come due and to earn a reasonable net income is
A) solvency and leverage
B) solvency and profitability
C) solvency and liquidity
D) solvency and equity

Question

Quizplus · Accepted Answer

The ability of a business to pay its debts as they come due is referred to as solvency, while the ability of the business to earn a reasonable net income is referred to as profitability. Therefore, both solvency and profitability are the best choice.

The Ability of a Business to Pay Its Debts as They