Solvency Ratios Level 1 Quiz Financial Analysis Quiz On Jan 25, 2026 Share Solvency Ratios Level 1 26 questions in 10 minutes Pass Score 70% 1 / 26 The proprietary ratio is a type of solvency ratio. True False The proprietary ratio measures the proportion of owners' equity in total assets, making it a solvency ratio 2 / 26 Solvency ratios can be influenced by a company's capital structure. True False A company's capital structure affects its solvency ratios by altering the balance between debt and equity 3 / 26 Solvency ratios include the current ratio and quick ratio. False True The current ratio and quick ratio are liquidity ratios, not solvency ratios 4 / 26 A high solvency ratio indicates a higher risk of bankruptcy. True False A high solvency ratio generally suggests a lower risk of bankruptcy because the company is more capable of meeting its long-term obligations 5 / 26 Solvency ratios can help assess a company's ability to pay off its long-term debts. False True Solvency ratios are specifically designed to assess long-term debt repayment capacity 6 / 26 Solvency ratios are primarily used to evaluate short-term financial performance. True False Solvency ratios focus on long-term financial stability and debt management 7 / 26 A lower solvency ratio generally indicates better financial stability. False True A lower solvency ratio might indicate higher financial risk; higher ratios typically indicate better stability 8 / 26 Solvency ratios are used to evaluate a company's liquidity. True False Solvency ratios assess long-term financial health, not short-term liquidity 9 / 26 The quick ratio is an example of a solvency ratio. False True The quick ratio is a liquidity ratio, not a solvency ratio 10 / 26 Solvency ratios are calculated to determine the short-term liquidity of a business. False True Solvency ratios are used to assess long-term financial health, not short-term liquidity 11 / 26 The debt ratio and debt-to-equity ratio are both solvency ratios. False True Both ratios are used to assess a company’s long-term financial stability and debt levels 12 / 26 The long-term debt to equity ratio is a solvency ratio. True False This ratio measures the proportion of long-term debt to equity, assessing long-term financial stability 13 / 26 The debt-to-capital ratio is not considered a solvency ratio. False True The debt-to-capital ratio is a solvency ratio that measures the proportion of debt in the company's capital structure 14 / 26 Solvency ratios are less important than liquidity ratios in financial analysis. True False Both solvency and liquidity ratios are important, but solvency ratios are critical for assessing long-term financial health 15 / 26 Solvency ratios are calculated using current liabilities and current assets. False True Solvency ratios are based on long-term debt and equity, not current liabilities and assets 16 / 26 Solvency ratios are not useful for comparing companies in different industries. True False While industry norms can affect comparisons, solvency ratios are still useful for assessing relative financial stability 17 / 26 The debt-to-equity ratio is a common solvency ratio. True False The debt-to-equity ratio measures the proportion of debt used relative to equity, which is a key solvency ratio. 18 / 26 The debt-to-assets ratio is a solvency ratio. False True The debt-to-assets ratio assesses what portion of a company's assets are financed by debt, which is a key solvency measure 19 / 26 Solvency ratios include the operating cash flow ratio. True False The operating cash flow ratio is a liquidity ratio, not a solvency ratio 20 / 26 The solvency ratio is calculated using only long-term liabilities. True False Solvency ratios typically involve both long-term liabilities and equity 21 / 26 Solvency ratios measure a company's ability to meet its short-term obligations. True False Solvency ratios focus on a company's long-term debt and financial stability, not short-term obligations 22 / 26 A solvency ratio of less than 1 indicates more debt relative to equity. False True A solvency ratio of less than 1 suggests that debt exceeds equity 23 / 26 A solvency ratio of 1.5 means the company has more debt than equity. False True A solvency ratio of 1.5 suggests that equity is 1.5 times the debt, indicating more equity relative to debt 24 / 26 The interest coverage ratio is a type of solvency ratio. True False The interest coverage ratio measures a company’s ability to pay interest on its debt, making it a solvency ratio. 25 / 26 The equity ratio is a solvency ratio. True False The equity ratio measures the proportion of a company's assets financed by shareholders' equity, a solvency metric 26 / 26 Companies with high solvency ratios are typically viewed as less risky. False True High solvency ratios generally indicate lower financial risk due to strong debt management capabilities Your score is LinkedIn Facebook Twitter VKontakte 0% Send feedback define solvencyfinancial solvencyliquidity vs solvency
