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Solvency Ratios Quiz

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1. What does a solvency ratio measure?

2. What is the optimal range of solvency ratio for a company?

3. If a company's solvency ratio is less than 20%, what does it indicate?

4. Which financial statement is primarily used to calculate the solvency ratio?

5. How does the solvency ratio differ from liquidity ratios?

6. If the solvency ratio is increasing over time, what does this suggest about the company?

7. Which of the following is NOT a useful application of the solvency ratio?

8. Why is a high solvency ratio not always desirable?

9. What effect does depreciation have on the solvency ratio?

10. Which company would likely have a better solvency ratio: a tech startup or an established manufacturing company?