Which of the following choices best describes reasonable conclusions an analyst might make about the companys solvency?

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Which of the following choices best describes reasonable conclusions an analyst might make about the company’s solvency?

A. Comparing FY14 with FY10, the company’s solvency improved, as indicated by an increase in its debt-to-assets ratio from 0.14 to 0.27.

B. Comparing FY14 with FY10, the company’s solvency deteriorated, as indicated by a decrease in interest coverage from 10.6 to 8.4.

C. Comparing FY14 with FY10, the company’s solvency improved, as indicated by the growth in its profits to GBP 645 million.

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International Financial Statement Analysis CFA Institute Investment Series

ISBN: 9780470287668

1st Edition

Authors: Thomas R. Robinson, Hennie Van Greuning CFA, Elaine Henry, Michael A. Broihahn, Sir David Tweedie

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