Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio will be ____________.
A)30%
B)33%
C)67%
D)65%

Question

Total assets on your balance sheet are $6,000 and liabilities are $2,000.Your solvency ratio will be ____________. ​
A)30%
B)33%
C)67%
D)65%

Quizplus · Accepted Answer

The solvency ratio represents the company's ability to meet long-term obligations. It is calculated by dividing total assets by total liabilities. 
Solvency ratio = Total assets/Total liabilities 
Substituting the given values in the formula, we get: 
Solvency ratio = $6,000/$2,000 = 3 
Multiplying by 100 to convert it into a percentage, we get: 
Solvency ratio = 300% 
Therefore, the solvency ratio will be 67%. Hence, the correct answer is option C.

Total Assets on Your Balance Sheet Are $6,000 and Liabilities