Which of the Following Ratios Provides a Solvency Measure That

question 49

Multiple Choice

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

• A) ratio of fixed assets to long-term liabilities
• B) ratio of net sales to assets
• C) number of days' sales in receivables
• D) rate earned on stockholders' equity

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