Which of the Following Ratios Is Most Useful in Evaluating

question 105

Multiple Choice

Which of the following ratios is most useful in evaluating solvency?

• A)Debt to equity ratio.
• B)Current ratio.
• C)Receivables turnover ratio.

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Definitions:

Adjusting Entry

A journal entry made at the end of the accounting period to allocate income and expenditure to the correct period.

Accounting Period

denotes the specific period of time covered by financial statements, typically a year or a quarter.

Liability Insurance

Insurance that provides protection against claims resulting from injuries and damage to people and/or property.

Prepaid Insurance

An asset account representing insurance payments made in advance for future coverage periods.