Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Controlling

Question:

Which of the following is not a solvency ratio?

Options:

Debt Equity Ratio

Proprietary Ratio

Return on Investment

Interest Coverage ratio

Correct Answer:

Return on Investment

Explanation:

Return on investment (ROI) is a financial ratio used to calculate the benefit an investor will receive in relation to their investment cost.

The other 3 options are examples of Solvency Ratio.

The following ratios are normally computed for evaluating solvency of the business. 1. Debt-Equity Ratio; 2. Debt to Capital Employed Ratio; 3. Proprietary Ratio; 4. Total Assets to Debt Ratio; 5. Interest Coverage Ratio.