Which of the Following Solvency Ratios Is the Best Measure

question 17

Multiple Choice

Which of the following solvency ratios is the best measure of a company's ability to pay interest and maturing principal amounts on its long-term debt?

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

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Definitions:

Thin-Slice Judgments

Quick assessments made based on very small samples of behavior, often believed to reveal significant insights about the observed situation or individual.

Cognitive Processing

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

Showmanship Approach

An approach that involves doing something unusual to catch the prospect’s attention and interest.

Sales Interaction

The dynamic exchange between a salesperson and a potential or existing customer aimed at promoting or selling a product or service.