Which of the following cash flow ratios is used to determine an entity's solvency?
A) Debt coverage ratio.
B) Free cash flow ratio.
C) Cash adequacy ratio.
D) Cash flow ratio.

Question

Quizplus · Accepted Answer

The debt coverage ratio is used to determine the entity's ability to cover its obligations by analyzing its ability to generate enough cash flow to cover its debt payments. This ratio focuses on the long-term solvency of the entity.

Which of the Following Cash Flow Ratios Is Used to Determine