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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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