Solvency Ratio



Next video:
Loading the player...

The solvency ratio is one of many ratios used to measure a company's ability to pay its debts. The formula to determine the solvency ratio is the sum of net after-tax profit and depreciation divided by the sum of short-term and long-term liabilities. 

 

Related Articles
  1. Investing Basics

    Liquidity Vs. Solvency

    Learn about the differences between these two words and how each one is used in the stock market.
  2. Fundamental Analysis

    5 Basic Financial Ratios And What They Reveal

    Understanding financial ratios can help investors pick strong stocks and build wealth. Here are five to know.
  3. Stock Analysis

    The Biggest Risks of Investing in Johnson & Johnson Stock (JNJ)

    Learn the largest risks to investing in Johnson & Johnson through fundamental analysis and other potential risks. Also discover how JNJ compares to its peers.
  4. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  5. Stock Analysis

    The Biggest Risks of Investing in Celgene Stock (CELG)

    Discover the biggest risks to investing in Celgene Corporation when reviewing fundamental analysis and other external factors that may affect the stock's price.
  6. Economics

    Why Enron Collapsed

    Enron’s collapse is a classic example of greed gone wrong.
  7. Stock Analysis

    Analyzing Oracle's Return on Equity (ROE) (ORCL)

    Learn about Oracle's ROE. How have net profit margin, asset turnover and financial leverage influenced ROE relative to peers and historical performance?
  8. Stock Analysis

    The Biggest Risks of Investing in Altria Stock (MO)

    Learn the biggest risks to Altria Group stock through fundamental analysis. Also discover what external risks pose a threat to Altria and the tobacco industry.
  9. Investing

    Johnson & Johnson P/E Ratio: A Quick Analysis

    Calculating and analyzing Johnson and Johnson's P/E Ratio.
  10. Stock Analysis

    Analyzing Chipotle's Return on Equity (CMG)

    Learn about Chipotle's return on equity (ROE), read about restaurant closures and Chipotle's E.coli outbreak, and gain knowledge about the fast-casual food system.
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center