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    Question

    An analyst who is interested in a company’s long-term solvency would most likely examine the:

    A Return on total capital Correct Answer Incorrect Answer
    B Interest coverage ratio Correct Answer Incorrect Answer
    C Current ratio Correct Answer Incorrect Answer
    D Inventory turnover ratio Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Fixed charge/Interest coverage is a solvency ratio. Return on total capital is a measure of profitability. The rest of the ratios are liquidity and turnover ratios.

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