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Question
Which ratio is considered as safe margin of solvency?
Which ratio is considered as safe margin of solvency?
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Solution
The correct option is B Current ratio
The current ratio measures company's ability to pay short-term and long-term obligations. To gauge this ability. the current ratio considers the current total assets of a company relative to that company's current total liabilities.
The current ratio measures company's ability to pay short-term and long-term obligations. To gauge this ability. the current ratio considers the current total assets of a company relative to that company's current total liabilities.
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