Assertion (A): Proprietary Ratio measures the long-term solvency of the enterprise. Reason (R): Interest Coverage Ratio is a profitability ratio. In the context of the above two statements, which of the following is correct?

Question

KollegeApply · Accepted Answer

Only (A) is correct. Explanation: The Proprietary Ratio measures the proportion of shareholder funds in total assets, which helps in determining the business’s long-term solvency. However, the Interest Coverage Ratio is more of a solvency ratio than a profitability measure. As a result, only Assertion (A) is correct.

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