Solvency Ratio:
It is also called as leverage ratio, which measures the long-term obligation of the business
concern. This ratio helps to understand, how the long-term funds are used in the business
concern. Some of the solvency ratios are given below:
Debt-Equity Ratio = External Equity / Internal Equity
Proprietary Ratio = Shareholder or Shareholder's Fund / Total Assets
Interest Coverage Ratio = EBIT / Fixed Interest Charges
It is also called as leverage ratio, which measures the long-term obligation of the business
concern. This ratio helps to understand, how the long-term funds are used in the business
concern. Some of the solvency ratios are given below:
[Post Image Courtesy of Graur Razvan Ionut at FreeDigitalPhotos.net]
Debt-Equity Ratio = External Equity / Internal Equity
Proprietary Ratio = Shareholder or Shareholder's Fund / Total Assets
Interest Coverage Ratio = EBIT / Fixed Interest Charges
Solvency Ratio
![Solvency Ratio]()
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