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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Evaluating the Financial Position of Clients

Mr. Raman Iyer has total assets of ₹80 lakh and total liabilities of ₹20 lakh. Of the assets, ₹10 lakh is in liquid form. What is his solvency ratio (net worth to total assets)?

The solvency ratio is net worth divided by total assets. Net worth is ₹80 lakh minus ₹20 lakh, which is ₹60 lakh, and dividing by ₹80 lakh gives 75%. The 25% figure would be liabilities to assets, not solvency.

  1. A75%Correct
  2. B25%
  3. C12.5%
  4. D60%

Explanation

Net worth = 80 − 20 = ₹60 lakh. Solvency ratio = 60/80 = 75%. The 25% option is liabilities to assets, a wrong numerator. The 12.5% option is liquid assets to total assets, which is a different measure.

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