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Investments glossary

Solvency Ratio Definition


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Quotes of the day:

Love cannot endure indifference. It needs to be wanted. Like a lamp, it needs to be fed out of the oil of another\'s heart, or its flame burns low.

— Henry Ward Beecher

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.


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