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
Reasoning: Solvency ratios are calculated to determine the long-term solvency of business
Answer & explanation
Correct answer: option 2
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.