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'.