The ratio which measures the solvency of a firm is the
Answer Details
The ratio which measures the solvency of a firm is the quick ratio. The quick ratio is also known as the acid-test ratio. It is used to determine a company's ability to pay off its current liabilities immediately, using only its most liquid assets such as cash, marketable securities and accounts receivable. It excludes inventory because inventory is not easily converted to cash in the short term. A high quick ratio indicates that the company has enough liquid assets to cover its short-term obligations and is therefore considered financially solvent.