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    Question

    Which of the following is a ratio used to know the solvency of a business?

    A Current Ratio Correct Answer Incorrect Answer
    B Debt Equity Ratio Correct Answer Incorrect Answer
    C Quick Ratio Correct Answer Incorrect Answer
    D Inventory Turnover Ratio Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Debt/Equity Ratio is a solvency ratio used to measure a company's financial leverage, calculated by dividing a company's total liabilities by its stockholders' equity. The D/E ratio indicates how much debt a company is using to finance its assets relative to the amount of value represented in shareholders' equity.

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