Question : Assertion A:- Long-term and short-term solvency of an enterprise can be assessed on the basis of financial statement analysis.
Reason R:- Such analysis is done by a securities analyst who is interested in cash-generating ability, dividend payout policy and the behavior of share prices.
Option 1: Both Assertion A and reason R are correct but the reason R is not the correct explanation of Assertion A
Option 2: Both Assertion A and reason R are correct but the reason R is the correct explanation of Assertion A
Option 3: Both Assertion A is correct but the reason R is not correct
Option 4: Both Assertion A and reason R are not correct
Correct Answer: Both Assertion A and reason R are correct but the reason R is the correct explanation of Assertion A
Solution : Answer = Both Assertion A and reason R are correct but reason R is the correct explanation of Assertion A
Long-term and short-term solvency of an enterprise can be assessed on the basis of financial statement analysis. Such analysis is done by a securities analyst who is interested in cash-generating ability, dividend payout policy and the behaviour of share prices. Hence, the correct option is 2.
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