Stability Ratio


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STABILITY RATIO: These ratios help in ascertaining long term solvency of a firm which depends basically on three factors:

 

(i) Whether the firm has adequate resources to meet its long term funds requirements.

 

(ii) Whether the firm has used an appropriate debt-equity mix to raise long-term funds.

 

(iii) Whether the firm earns enough to pay interest & instalment of long-term loans in time.


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