Which of the Following Ratios Provides a Solvency Measure That

question 42

Multiple Choice

Which of the following ratios provides a solvency measure that shows the margin of safety of noteholders or 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

---

Definitions:

Innate Needs

Fundamental physiological or psychological requirements for the well-being of an organism that are natural and inherent.

Human Behavior

The range of actions and mannerisms made by individuals and influenced by culture, attitudes, emotions, values, ethics, authority, rapport, hypnosis, persuasion, coercion, and genetics.

Situational Forces

External circumstances or environments that influence individuals' behavior and decisions.

Self-actualization

The realization or fulfillment of one's talents, potential, and capabilities, considered as the ultimate goal of personal development.