The ratio that measures solvency by relating cash flows from operating activities to total liabilities is the:

Question

Quizplus · Accepted Answer

The cash flow adequacy ratio measures the ability of a company to meet its liabilities using cash flows from operating activities. This ratio indicates how well a company can generate cash flow to meet its obligations. The other options (gearing ratio, operations index, turnover of cash flow ratio) do not specifically measure solvency in relation to cash flows from operating activities and are therefore not as relevant.

The Ratio That Measures Solvency by Relating Cash Flows from Operating