Consider the following information: Share capital Rs. 2,00,000 Long term debts Rs. 1,00,000 Current liabilites Rs. 40,000 Fixed assets Rs. 1,80,000 Current assets Rs. 1,60,000 The Solvency ratio of the business is

2.43 : 1
03:02
3.4 : 1.7
4.75 : 1.43

The correct answer is: D. 4.75 : 1.43

Solvency ratio is a measure of a company’s ability to pay off its long-term debts. It is calculated by dividing a company’s long-term assets by its long-term liabilities.

In this case, the company’s long-term assets are Rs. 1,80,000 and its long-term liabilities are Rs. 1,00,000. Therefore, the company’s solvency ratio is 1.8 : 1.

However, the question asks for the solvency ratio of the business, which includes both long-term and current assets and liabilities. The company’s current assets are Rs. 1,60,000 and its current liabilities are Rs. 40,000. Therefore, the company’s solvency ratio is 4.75 : 1.43.

Option A is incorrect because it does not take into account the company’s current assets and liabilities. Option B is incorrect because it does not take into account the company’s long-term assets. Option C is incorrect because it does not take into account the company’s current liabilities.