Question : Which ratios provide information critical to the firm's long-term operation?
Option 1: Profitability
Option 2: Solvency
Option 3: Activity
Option 4: Liquidity

Question

Question : Which ratios provide information critical to the firm's long-term operation?

Option 1: Profitability

Option 2: Solvency

Option 3: Activity

Option 4: Liquidity

Team Careers360 · Accepted Answer

Correct Answer: Solvency

Solution : One statistic used to evaluate a company's capacity to repay its long-term financial obligations is the solvency ratio.
It evaluates the ratio of a company's total debt commitments to its after-tax income, excluding non-cash depreciation charges.
For the long-term operation of the company, these ratios offer the crucial information.
Hence option 2 is the correct answer.

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Question : Which ratios provide information critical to the firm's long-term operation?Option 1: Profitability Option 2: SolvencyOption 3: ActivityOption 4: Liquidity

Related Questions

Question : With respect to the liquidity Ratio, which of the following statements is incorrect?

Question : With respect to the liquidity Ratio, which of the following statements is incorrect?

Question : The following groups of ratios primarily measure risk:

Question : Which of the following answers is correct? A: The average collection period can be used to assess credit and collection policies. B: The solvency ratios provide critical information for the firm's long-term operation.

Question : Which of the following is not the objective of Ratio Analysis?

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Question : Which ratios provide information critical to the firm's long-term operation?
Option 1: Profitability
Option 2: Solvency
Option 3: Activity
Option 4: Liquidity

Question : Which of the following answers is correct?
A: The average collection period can be used to assess credit and collection policies.
B: The solvency ratios provide critical information for the firm's long-term operation.