What's it: The solvency ratio is a financial ratio to measure a company's ability to meet its long-term obligations. To calculate it, we divide the debt relative to the firm's capital or assets. Or, we compare a company's ability to generate
Solvency Ratio
Gearing: Meaning, How to Calculate, Pros and Cons
What's: Gearing shows you how much a company depends on debt in its capital structure. It's a term in the UK and the same as leverage for the term in the United States.The company's capital structure is divided into two sources: debt and
Fixed Charge Coverage Ratio: Calculation and Interpretation
What's it: The fixed charge coverage ratio is a financial ratio to measure how well a company can cover interest and lease payments. Both represent fixed costs, which the company has to pay regardless of whether the company generates
Debt-to-Assets Ratio: Calculation and Interpretation
What's it: The debt-to-assets ratio is a leverage ratio to measure the extent to which a company depends on debt to finance its assets. We calculate it by dividing total debt by total assets.Debt is a capital alternative to equity. When a
Debt-to-Capital Ratio: How to Calculate and Interpret
What's it: The debt-to-capital ratio is a leverage ratio calculated by dividing the total debt by the company's total capital. Total capital equals total debt plus total equity.A higher ratio indicates high leverage. A company depends more
Debt-to-Equity Ratio: Calculation and Interpretation
What's it: The debt-to-equity ratio is a leverage ratio by compares the relative proportions of a company's capital structure. Specifically, it measures how much debt capital is compared to equity capital.A higher ratio indicates higher
Assets-to-Equity Ratio: Calculation and Interpretation
What's it: The asset-to-equity ratio is a financial ratio indicating the extent to which a company's assets are financed through equity. We calculate it by dividing total assets by equity.We can find this ratio in the DuPont
Interest Coverage Ratio: How to Calculate and Interpret it
What's it: The interest coverage ratio is a financial ratio to measure a company's ability to pay interest expense using the profit it generates. Earnings before interest and tax (EBIT) is a commonly used profit metric. It is then