Question: Explain why Solvency and why the difference is important
Compare 2015 to 2016
These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.Solvency is important for the organization as it ensures that the company has the right mix of debt and equity so that the weighted average cost of capital is optimized and the shareholder’s wealth is maximized. It is best measured by the financial leverage ratio and it has increased from 2.79 to 3.20 over the period 2015 – 2016 which means that the company is deploying higher levels of debt to finance its asset mix....
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