The only given ratio that is a measure of solvency is; D: Debts to Assets
Solvency is a term that shows if a company can meet its long term debts or not. It is important for a company to be solvent as it can handle its debts and financial obligations.
A solvency ratio terminology is used when evaluating insurance companies, comparing the size of their capital relative to the premiums written, and measures the risk an insurer faces on claims it cannot cover.
The main solvency ratios are the debt-to-assets ratio, the interest coverage ratio, the equity ratio, and the debt-to-equity (D/E) ratio. These measures may be compared with liquidity ratios, which consider a firm's ability to meet short-term obligations rather than medium- to long-term ones.
Thus, we can conclude that the option that is a measure of Solvency is Option D: Debt to assets ratio
The options are;
A) Acid-test ratio
B) Accounts receivable turnover
C) Current ratio
D) Debt to assets
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