Solvency Ratios: Debt to Assets and Debt to Equity

An analyst is interested in the solvency and valuation of a company based on ratio analysis. In order to gain more insight, the analyst should _most likely_ look at:

Incorrect. Operating margin is a measure of profitability for a company.

Correct! Solvency ratios include financial leverage, debt to equity, debt to assets, debt to capital, interest coverage, and fixed charge coverage. Valuation measures include P/E, P/CF, P/S, P/BV, per-share quantities, and dividend-related quantities.

Incorrect. The quick ratio is a measure of liquidity and ROE is a measure of profitability for a company.

the quick ratio as a measure of solvency and the ROE ratio as a measure of value.

financial leverage as a measure of solvency and the P/E ratio as a measure of value.

financial leverage as a measure of solvency and operating margin as a measure of value.