You are on page 1of 1

Name : Lutfia Nur Afriani

Class : 5AD
Attendance Number : 13
NPM : 061930500658
English 5
Week 12 Assignment – Answer
Get Ready
1. Solvency is the ability of a company to pay its debts.
2. We can predict solvency by analyzing the company’s operating cycle and calculating its
current ratio, but solvency cannot be predicted 100%.
Reading
1. False
2. True
3. False
Vocabulary
1. B
2. C
3. A
4. D
5. E
Fill in the Blanks
1. Repetitive
2. Operating cycle
3. Current Ratio
4. Catastrophe
5. Indicator
How can investor be reasonably sure that a company won’t go bankrupt?
= Investor can be reasonably sure that a company won’t go bankrupt by calculating the
company’s current ratio. We can calculate it by divide the company’s current assets by its current
liabilities. The solvency is good if the current ratio is above 2.0. But if the ratio is under 2.0 there
is a possibility of the company will go bankrupt.

You might also like