Assertion: Solvency ratios determine the ability of a business to service its indebtedness. Reasoning: Solvency ratios are calculated to determine the long-term solvency of business

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A. Assertion (A) is true but Reasoning (R) is not correct. Assertion (A) is not true but Reasoning (R) is correct.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Solvency Ratios: Ratios which are calculated to determine the long-term solvency of business are known as solvency ratios. Thus, these ratios determine the ability of a business to service its indebtedness.