A measure of long-term solvency is
A)Return on equity ratio.
B)Profit margin.
C)Days debtors.
D)Debt to equity ratio.

Question

Quizplus · Accepted Answer

The debt to equity ratio is a measure of a company's long-term solvency as it indicates how much of a company's financing comes from debt versus equity. A higher debt to equity ratio increases the company's financial risk and decreases its ability to make debt payments in the long term. Therefore, a lower debt to equity ratio is preferred.

A Measure of Long-Term Solvency Is