Question:
\(\_\_\_\_\_\_\_\) ratios are calculated to determine the ability of the business to service its debt in the long run.
\(\_\_\_\_\_\_\_\) ratios are calculated to determine the ability of the business to service its debt in the long run.
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Solvency ratios help evaluate a company’s financial health and its ability to sustain operations over the long term.
Updated On: Jan 21, 2025
- Liquidity
- Turnover
- Solvency
- Profitability
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The Correct Option is C
Solution and Explanation
Solvency ratios assess a company’s ability to meet its long-term financial obligations. Common solvency ratios include:
Debt-to-equity ratio
Interest coverage ratio
These ratios provide insights into the company’s financial leverage and long-term stability.
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