Solvency Ratios include:

A. Debt-Equity Ratio
B. Current Ratio
C. Debt to capital employed Ratio
D. Gross Profit Ratio
E. Return on capital employed

Choose the correct answer from the options given below:

A and C only

The correct answer is Option (1) → A and C only

The persons who have advanced money to the business on long-term basis are interested in safety of their periodic payment of interest as well as the repayment of principal amount at the end of the loan period. Solvency ratios are calculated to determine the ability of the business to service its debt in the long run. 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.

* Current ratio is a liquidity ratio.
* Gross Profit Ratio and Return on capital employed is profitability ratio.