Which of the Following Measures Would Assist in Assessing the Solvency

question 114

Multiple Choice

Which of the following measures would assist in assessing the solvency of a company?

• A)Debt-to-assets ratio.
• B)Fixed asset turnover ratio.
• C)Return on equity ratio.
• D)Quick ratio.

---

Definitions:

Variable Cost

Expenses that change in proportion to the activity of a business, such as cost of goods sold or materials costs.

Fixed Cost

Costs that do not vary with the level of output or production, such as rent, salaries, and insurance premiums.

Activity Level

A measure of the volume of production or operations, often used to plan and control various business activities.

Period Costs

Expenses that are not directly tied to the production of goods and are expensed in the period in which they are incurred.