A solvency ratio evaluates a company’s capacity to meet long-term financial obligations. It measures the proportion of assets financed by debt versus equity, as well as long-term financial stability. Solvency ratios assess different aspects of a firm’s ability to service debts in the long term. Discover the primary types, definitions, and formulas. Discover the meaning, types, and importance of solvency ratios in financial analysis. Learn how to calculate key ratios like Debt to Equity, Debt Ratio , and Interest Coverage, and understand their role in assessing long-term financial health. Let’s understand the solvency ratio meaning and interpretation in detail, learn how to calculate it, and understand its various types. What is solvency ratio ? A solvency ratio is a financial metric that assesses a company's ability to meet its long-term debt obligations.
