Solvency Ratio

The solvency ratio measures a company's ability to meet its long-term financial obligations. It compares a company's available assets to its long-term debts, indicating how well it can sustain operations and pay off debts over time. A higher ratio suggests the company is financially healthier and better positioned to handle future obligations, while a lower ratio may signal potential financial difficulty. Essentially, it helps investors and creditors assess the company's long-term stability and risk level.