Which of the Following Solvency Positions Would a Company Consider

question 44

Multiple Choice

Which of the following solvency positions would a company consider most favourable?

• A)a high debt to total assets ratio and a low times interest earned ratio
• B)a low debt to total assets ratio and a high times interest earned ratio
• C)a high debt to total assets ratio and a high times interest earned ratio
• D)a low debt to total assets ratio and a low times interest earned ratio

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Definitions:

Investments

Assets purchased with the expectation that they will generate income or appreciate in the future.

Financial Statements

Formal records of the financial activities and position of a business, presenting its operations, financial condition, and cash flows.

Consolidated Financial Statements

Financial statements that show the aggregated financial position and results of operations for a parent company and its subsidiaries.

Parent's Control

The influence and authority a parent company holds over its subsidiary's operations and financial decisions.