To assess the long-term solvency of a business, which of the following ratios are used?(A) Interest coverage ratio(B) Proprietary ratio(C) Acid test ratio(D) Debt to capital employed ratioChoose the correct answer from the options given below:
- A(A), (B) and (D) only
- B(A), (B) and (C) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
Ratios like Interest Coverage Ratio (A), Proprietary Ratio (B), and Debt to Capital Employed Ratio (D) assess long-term obligations, debt capacity, and financial solvency.In contrast, the Acid Test Ratio (C) measures short-term liquidity, not long-term solvency. Therefore, statements A, B, and D are the correct metrics.