Long-term solvency is indicated by:
Long-term solvency is indicated by:
Solution
✅ Correct Option: 2
Liquid ratio measures short-term solvency, and profitability ratios measure earning power, not solvency. Debt-equity ratio, which compares outside long-term debt to owners' funds, is the standard indicator of long-term solvency, reflecting the firm's ability to meet its long-term obligations.
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