The correct answer is: C. Time interest earned ratio.
The time interest earned ratio is a measure of
288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTubeThe acid test ratio is a measure of a company’s liquidity. It is calculated by dividing a company’s current assets by its current liabilities. A higher acid test ratio indicates that a company has more liquid assets to meet its short-term obligations.
The debt equity ratio is a measure of a company’s financial leverage. It is calculated by dividing a company’s total debt by its total equity. A higher debt equity ratio indicates that a company has more debt financing and less equity financing.
The return on investment ratio is a measure of a company’s profitability. It is calculated by dividing a company’s net income by its total assets. A higher return on investment ratio indicates that a company is more profitable.
In conclusion, the time interest earned ratio is the best indicator of a firm’s long-term solvency because it measures a company’s ability to pay its interest expenses.