Question

1. Which of the following is a solvency ratio? A. Debt ratio B. Earnings per share...

1. Which of the following is a solvency ratio?

A. Debt ratio

B. Earnings per share

C. Gross profit percentage

D. Cash conversion cycle

2. Two measures that are often looked at in valuing a business are:

A. Price Earnings Ratio and Dividend per Share.

B. Price Earnings Ratio and Dividend Yield.

C. Earnings per Share and Dividend Yield.

D. Earnings per Share and Dividend per Share.

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Homework Answers

Answer #1

1. A. Debt ratio

Solvency Ratio indicates the ability of the company to meet the debts i.e company has sufficient cash flow to meet the Short Term and Long Term Debts.

2. B- Price Earnings Ratio and Dividend Yield.

PE Ratio - It is the ratio of EPS and Market Price per share. Investors often look at this for valuation of Business. As it indicates the shares of the company is trading at how many times multiple of EPS.

Dividend Yield indicates the ratio of Dividend per share to the Market price per Share. It is used to look at the potential return on investments.


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