Which Ratio Measures Solvency by Relating Cash Flows from Operating

question 45

Multiple Choice

Which ratio measures solvency by relating cash flows from operating activities to total liabilities?

• A) gearing ratio.
• B) operations index.
• C) cash flow adequacy ratio.
• D) turnover of cash flow ratio.

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Definitions:

Horizontal Analysis

A method of financial analysis in which figures in financial statements over different periods are compared line by line to identify trends.

Statement of Cash Flows

A financial report that details the inflows and outflows of cash within an organization over a specific period.

Fees Earned

Fees earned is an accounting term that refers to revenue generated from providing services to clients or customers during a specific time period.

Prepaid Insurance

The portion of insurance premiums that have been paid in advance for future coverage, and is considered an asset on the balance sheet.