Question

Name any two solvency ratios.

Hint:

Liquidity = short term; \textbf{Solvency} = long term. Quote at least one “debt vs. equity” measure.

Answer 1

Step 1: Recall meaning of solvency ratios.
They assess a firm’s long-term ability to meet obligations.
Step 2: Quote two standard ratios.
- \emph{Debt–Equity Ratio} \(=\frac{\text{Long-term Debt}}{\text{Shareholders’ Funds}}\). - \emph{Proprietary (Equity) Ratio} \(=\frac{\text{Shareholders’ Funds}}{\text{Total Assets}}\). (Other valid answers: Debt Ratio, Interest Coverage/Times Interest Earned, Capital Gearing.)
Final Answer: \[ \boxed{\text{Debt–Equity Ratio and Proprietary Ratio}} \] % Quciktip