Solvency ratios are used to assess a company's:
A)Short-term debt paying ability.
B)Profitability.
C)Long-term debt paying ability.
D)Efficiency in use of its assets.

Question

Quizplus · Accepted Answer

Solvency ratios are used to assess a company's long-term debt paying ability. These ratios provide investors with an idea of a company's ability to meet its long-term obligations, including any outstanding debts or loans that are not due to be paid in the near future. Examples of solvency ratios include debt-to-assets ratio, debt-to-equity ratio and interest coverage ratio.

Solvency Ratios Are Used to Assess a Company's