# Category Solvency Ratio

It is the measure to judge the company’s ability to meet its long term obligation. That is why, financial institutions and banks pay a lot of importance to this yardstick. Solvency ratio is further classified into following ratios.

Times Interest Earned Ratio

Debt to Equity Ratio

Fixed Charge Coverage

Equity Multiplier

Debt to Capital Ratio

Debt Ratio

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It is the measure to judge the company’s ability to meet its long term obligation. That is why, financial institutions and banks pay a lot of importance to this yardstick. Solvency ratio is further classified into following ratios. Times Interest…

## Debt Ratio

Debt ratio is a ratio which is used to calculate the debt percentage of the company with respect to its assets. That is why; it is also called debt to asset ratio. It can be calculated by the following formula:…

## Debt to Capital Ratio

Debt to capital ratio is the important solvency ratio. This is used to measure the leverage of the company and that is why; banks and financial institutions give it a lot of importance while allowing any company to take loan…

## Equity Multiplier

The equity multiplier is a leverage ratio and is calculated by dividing total assets by total equity. It is also called financial leverage. Equity multiplier formula: Equity multiplier = Total assets / total equity Actually, it is used to find…

## Fixed Charge Coverage

Fixed Charge Coverage ratio is an important solvency ratio. It is used to analyze profit before interest, taxes and lease payment is enough to cover the lease and interest payments. Formula It is calculated by dividing the profit before interest,…

## Debt to Equity Ratio

Debt to equity ratio is the important solvency ratio. It is a good yardstick to measure the financial leverage of the organization. It is denoted by D It is calculated by dividing the total liabilities by the stockholder’s equity. Formula…

## Times Interest Earned Ratio

Times Interest Earned Ratio is the solvency ratio. It is used to assess the company’s performance as to the payment of interest expense. It is a tool to judge whether the company has sufficient earnings or profit to pay its…