Which of the following ratios would not be the best measure of solvency?
A) Return on assets ratio
B) Debt-to-equity ratio
C) Debt service coverage ratio
D) Times-interest-earned ratio

Question

Quizplus · Accepted Answer

The return on assets ratio is a measure of profitability and does not directly measure solvency. It measures a company's ability to generate profits from its assets. The best measures of solvency are ratios that indicate a company's ability to meet its debt obligations, such as the debt-to-equity ratio, debt service coverage ratio, and times-interest-earned ratio.

Which of the Following Ratios Would Not Be the Best