Solvency Ratios Flashcards
Solvency ratios measures a firm ability to meet its long term obligations. Subsets of solvency ratios are known as 'leverage', 'long term debt' ratios
1
Q
Debt-to-equity
A
Total Debt / Total Shareholders’ equity
2
Q
Debt-to-capital
A
Total debt/total debt + total shareholders’ equity
3
Q
Debt-to-assets
A
Total Debt/ Total Assets
4
Q
Financial Leverage
A
Average Total Assets / average total equity
5
Q
Interest Coverage
A
Earnings before Interest and Taxes / Interest Payments
6
Q
Fixed Charge Coverage
A
Earnings before interest and taxes + lease payments / interest payments + lease payments
