The solvency ratio is a key metric used to measure an enterprise’s ability to meet its debt obligations and is used often by prospective business lenders. The solvency ratio indicates whether a company’s cash flow is sufficient to meet its short-and long-term liabilities. The lower a company’s solvency ratio, the greater the probability that it will default on its debt obligations.
Click to rate this post!
[Total: 0 Average: 0]