Which of the Following Ratios Is Not a Test of Solvency

question 95

Multiple Choice

Which of the following ratios is not a test of solvency?

• A) Debt to equity ratio.
• B) Times interest earned ratio.
• C) Cash coverage ratio.
• D) Earnings per share ratio.

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Definitions:

Revoked

The act of officially canceling or withdrawing a right, privilege, or membership.

Commercial Reasonableness

A standard used to evaluate the appropriateness of actions taken in a business context, ensuring they align with typical business practices and norms.

Business Judgment

refers to the decision-making process by corporate directors and officers that is presumed to be in the best interest of the company, protecting them from liability if the decisions are made in good faith and with reasonable care.

Counteroffer

A proposal made in response to an offer, signaling rejection of the initial offer and suggesting a new agreement for negotiation.