Solvency Ratios
Measuring Long-Term Financial Stability
Solvency ratios measure a company's ability to meet long-term obligations and continue operating over the long run. These ratios are especially important to lenders, investors, and credit rating agencies.
Note
Solvency ratios should be compared with industry averages because acceptable leverage varies significantly across industries.
Summary
Solvency ratios measure long-term financial strength and debt repayment capacity.