Solvency Ratios for Financial Analysis
Explore how solvency ratios measure a company's ability to survive long-term, including debt-to-total assets and times interest earned ratios. Learn to identify and compute ratios for analyzing liquidity, profitability, and solvency in firms.
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Presentation Transcript
Ratio Analysis Solvency Ratios Solvency ratios measure the ability of a company to survive over a long period of time. Debt to total assets and times interest earned are two ratios that provide information about debt-paying ability. SO 5 Identify and compute ratios used in analyzing a firm s liquidity, profitability, and solvency.
Ratio Analysis Solvency Ratios Measures the percentage of the total assets that creditors provide. SO 5 Identify and compute ratios used in analyzing a firm s liquidity, profitability, and solvency.
Ratio Analysis Solvency Ratios Provides an indication of the company s ability to meet interest payments as they come due. SO 5 Identify and compute ratios used in analyzing a firm s liquidity, profitability, and solvency.
Ratio Analysis Solvency Ratios Illustration 14-27 Summary of solvency ratios SO 5 Identify and compute ratios used in analyzing a firm s liquidity, profitability, and solvency.
