Technicals Stability Returns

Understanding Solvency Ratios

Solvency Ratios measure the company's ability to meet its long-term and short-term debt obligations. This metric provides an insight into the company.

The solvency ratios indicate whether the company's cash flow is sufficient or not to pay off its debts. Prospective lenders and bond investors use solvency ratios to evaluate a company's creditworthiness.

Solvency Ratios are also known as 'Leverage Ratios'.

Debt To Equity Ratio

Debt to Equity Ratio shows the relationship between the company's total debt and total shareholders fund. And it indicates whether the company is financially healthy or not and the ability of a company's shareholders' equity to pay its debt obligations in a tough time.

Short Term Debt to Equity

Short-Term Debt to Equity Ratio measures the company's ability to meet its short-term debt obligations by shareholders' equity. Short-Term Debts are current liabilities of the company

Interest Coverage Ratio

Interest Coverage Ratio measures how well a company can pay its interest expenses, which are concerned with outstanding debts. It is computed by dividing EBIT (Earnings Before Interest and Tax) by Interest Expenses.

Shareholders Equity Ratio

The Shareholders Equity Ratio measures how much the company's assets are funded using shareholder's equity instead of debt. This metric also tells how much shareholders claim on the company's assets in a time of liquidation

Dividend Coverage Ratio

The Dividend Coverage Ratio (DCR) measures the number of times a company can pay dividends to its shareholders. It is calculated by dividing the net income by dividend paid.

Debt to EBITDA Ratio

The Debt to EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) Ratio is a solvency metric that measures the company's ability to meet its debt obligations by earnings before covering its interest, taxes, depreciation, and amortization. It is calculated by dividing Total Debt by EBITDA.

Assets to Shareholders Equity

The Asset to Shareholders Equity Ratio measures how much the company's assets are financed using shareholder's equity instead of debt. In other words, it shows the portion of the assets that are financed by a company utilizing its shareholders' equity.

Debt to Assets Ratio

The debt to asset ratio is a solvency metric that indicates how much of the company's assets are capitalized by debts. In other words, it shows how much portions of a company's assets are financed by debts and equity.

CFO to Debt Ratio

Cash Flow from Operation (CFO) to Debt Ratio indicates how much time it will take for the company to meet its debt obligations by its cash flow from operations, or we can say that it is a measure of the operating cash generated by the company relative to its debts

Debt to Capital Ratio

A Debt to Capital Ratio is a solvency metric that measures the company's ability to meet its debt obligations through its total capital or the portion of the debt compared to its total capital. It indicates the company's capital structure and how well it is financing its capital.

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