Ratios that are used to examine an establishment's ability to meet its long-term financial obligations are termed ________ ratios.
A)solvency
B)profitability
C)operating
D)liquidity

Question

Quizplus · Accepted Answer

Solvency ratios are used to examine an establishment's ability to meet its long-term financial obligations. These ratios include debt-to-equity, interest coverage, and debt service coverage ratios. Profitability ratios measure an establishment's ability to generate profit, operating ratios assess an establishment's efficiency in operating its business, and liquidity ratios measure an establishment's ability to meet its short-term financial obligations.

Ratios That Are Used to Examine an Establishment's Ability to Meet