Respuesta :
Answer:
The correct answer is letter "C": Acid-test ratio.
Explanation:
The solvency ratio is used to measure a company's ability to pay its debt obligations in the short and long run. The lower the solvency ratio the most likely the company will fall into debt and vice versa. The solvency ratio is mostly used by financial institutions to evaluate companies that request loans for investment. It is calculated as follows:
[tex]Solvency ratio = \frac{After-tax Net Income - Tax Income + Non-cash Expenses}{Short-term Liabilities + Long-term Liabilities}[/tex]
Thus, the Acid-test ratio or quick ratio is not used in the long-term solvency ratio since it is a measure used in the short-term.
