A measure of long-term solvency is:
A) debt ratio.
B) debt to equity ratio.
C) equity ratio.
D) all these options measure long-term solvency.

Question

Quizplus · Accepted Answer

All of the options listed measure long-term solvency. The debt ratio measures the proportion of total assets financed by debt, while the debt to equity ratio measures the relationship between the amount of debt and the amount of shareholder equity. The equity ratio measures the amount of assets being financed by equity. These ratios are all indicators of a company's ability to meet its long-term financial obligations.

A Measure of Long-Term Solvency Is