Which of the Following Ratios Is Not a Measure of Long-Term

question 44

Multiple Choice

Which of the following ratios is not a measure of long-term solvency risk?

• A) Debt /Equity Ratio
• B) Interest Coverage Ratio
• C) Operating Cash Flows to Current Liabilities Ratio
• D) Liabilities to Assets Ratio

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Definitions:

Income Summary Account

A temporary account used to accumulate all income and expense accounts before transferring the net amount to retained earnings at the end of an accounting period.

Retained Earnings

The portion of net earnings not distributed as dividends to shareholders, but retained by the company to be reinvested in its core business or to pay debt.

Permanent Account

Accounts that carry their ending balances over into the next accounting period, typically including assets, liabilities, and equity accounts.

Statement Of Changes

A financial statement that shows how a company's equity has changed during a specific period due to various factors like profits, losses, and dividend payments.