Which of the following ratios is used to assess a company's solvency?

The debt to equity ratio is a key financial metric used to assess a company's solvency, which refers to its ability to meet long-term obligations. This ratio compares a company's total liabilities to its shareholders' equity, providing insight into the leverage and financial structure of the business. A higher debt to equity ratio indicates that a company relies more heavily on debt for financing, which may raise concerns about its ability to pay back debts in the long run. By evaluating this ratio, analysts can determine how well a company can cover its liabilities with its equity, reflecting its overall financial health and stability.

Other ratios listed serve different purposes: the return on equity ratio measures profitability in relation to shareholders' equity, the current ratio assesses short-term liquidity by comparing current assets to current liabilities, and the gross margin ratio evaluates the efficiency of production or sales relative to revenue. Therefore, these ratios are not focused on long-term solvency in the same way that the debt to equity ratio is.