Answer: Interest coverage ratio

## Explanation **Solvency ratios** measure a company's ability to meet its long-term obligations and continue operations over the long term. They assess the company's financial leverage and ability to pay interest and principal on debt. **Analysis of each option:** 1. **Quick ratio (Option A)** - This is a **liquidity ratio**, not a solvency ratio. It measures a company's ability to meet short-term obligations using its most liquid assets (cash, marketable securities, and receivables). 2. **Current ratio (Option B)** - This is also a **liquidity ratio**. It measures a company's ability to pay short-term obligations using current assets. 3. **Interest coverage ratio (Option C)** - This is a **solvency ratio**. It measures a company's ability to pay interest expenses on outstanding debt. It's calculated as: \[ \text{Interest Coverage Ratio} = \frac{\text{EBIT}}{\text{Interest Expense}} \] A higher ratio indicates better ability to meet interest obligations. **Other common solvency ratios include:** - Debt-to-equity ratio - Debt-to-assets ratio - Financial leverage ratio - Fixed charge coverage ratio **Conclusion:** Among the given options, the interest coverage ratio is the only one that measures solvency rather than liquidity.

Author: LeetQuiz .