Solvency Ratio 

A Solvency Ratio measures a company’s ability to meet its long-term financial obligations and continue operations into the foreseeable future. It evaluates whether a company’s assets are sufficient to cover its total liabilities, offering insight into long-term financial health. Common solvency ratios include: 

• Debt-to-Equity Ratio: 

= Total Debt / Total Equity    

• Equity Ratio: 

= Total Equity / Total Assets    

• Interest Coverage Ratio: 

= EBIT / Interest Expenses    A higher solvency ratio generally indicates greater financial stability and lower default risk.