Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Return on Assets (ROA)

Financial Accounting

14. Financial Statement Analysis

Ratios: Return on Assets (ROA)

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Multiple Choice

Long-term solvency ratios are also known as:

Profitability ratios

Efficiency ratios

Liquidity ratios

Leverage ratios

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Verified step by step guidance

Understand the concept of long-term solvency ratios: These ratios measure a company's ability to meet its long-term financial obligations and assess its financial leverage.

Recognize that long-term solvency ratios are also referred to as leverage ratios because they evaluate the extent to which a company uses debt to finance its operations.

Differentiate between the other types of ratios mentioned: Profitability ratios measure a company's ability to generate profit, efficiency ratios assess how well a company uses its assets, and liquidity ratios evaluate short-term financial health.

Recall that leverage ratios focus on the relationship between debt and equity or debt and assets, which is why they are synonymous with long-term solvency ratios.

Conclude that the correct answer is 'Leverage ratios' because it aligns with the definition and purpose of long-term solvency ratios.