39. A common measure of solvency is a) free cash flow. b) current ratio. C) asset tumover ratio. d) inventory tumover ratio. 40. Which of the following solvency positions would a company consider most favourable? a) a high debt to total assets ratio and a low times interest earned ratio b) a low debt to total assets ratio and a high times interest earned ratio c) a high debt to total assets ratio and a high times interest eamed ratio d) a low debt to total assets ratio and a low times interest earned ratio 41. Long-term creditors are usually most interested in evaluating a) liquidity. b) marketability. c) profitability d) solvency. 42. Affluent Limited reported the following on its statement of income: Income before income tax . $1,200,000 Income tax expense.... 380,000 Net income... $820.000 Interest expense was $150,000. Affluent Limited times interest earned was a) 9 times. b) 8 times c) 6.5 times. d) 5.5 times. 43. Free cash flow is calculated as a) net income minus net capital expenditures minus dividends paid. b) net income minus dividends paid. c) net cash provided (used) by operating activities minus net capital expenditures minus dividends paid. d) net cash provided (used) by investing activities minus net capital expenditures minus dividends paid