Which ratio would you use to examine a company's ability to pay its debts in the short term?
A)Earnings per share
B)Debt to assets ratio
C)Acid-test ratio
D)Return on equity

Question

Quizplus · Accepted Answer

Solvency ratios are used to assess a firm's long-term ability to pay its debts. Solvency ratios include: debt to assets, debt to equity, number of times interest earned and plant assets to long-term liabilities.

Which Ratio Would You Use to Examine a Company's Ability