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Solvency Ratio

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:

Solvency Ratio
[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

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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