Assertion (A): Debt-equity ratio indicates the long-term solvency of a company.
Reason (R): It measures the ability of the company to pay-off its long-term liabilities.
Select the correct answer.

A) Both (A) and (R) are correct, and (R) is the correct reason for (A) B) Both (A) and (R) are correct, but (R) does not explain (A) correctly C) (A) is correct, but (R) is incorrect D) (A) is incorrect, but (R) is correct

Answer & Solution

Correct Answer: Option A

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Assertion (A) Debt-equity ratio indicates the long-term solvency of a company...

Assertion (A): Debt-equity ratio indicates the long-term solvency of a company. Reason (R): It measures the ability of the company to pay-off its long-term liabilities. Select the correct answer.

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Assertion (A): Debt-equity ratio indicates the long-term solvency of a company.
Reason (R): It measures the ability of the company to pay-off its long-term liabilities.
Select the correct answer.