A common measure of long-term solvency is
A) the debt to assets ratio.
B) the current ratio.
C) the asset turnover.
D) inventory turnover.

Question

Quizplus · Accepted Answer

The debt to assets ratio measures the percentage of a company's assets that are financed with debt, which is a key indicator of its long-term solvency. A higher debt to assets ratio means that a larger portion of a company's assets are funded by debt, which increases the risk of insolvency if the company is unable to make its debt payments. Therefore, a lower debt to assets ratio indicates a more financially stable company.

A Common Measure of Long-Term Solvency Is