Solvency Ratio
/ˈsɑlvənsi ˈreɪʃioʊ/
Definitions
- (n.) A financial metric used in law and finance to determine an entity's ability to meet its long-term debts and financial obligations.
The court examined the company's solvency ratio to assess its capacity to pay creditors.
Forms
- solvency ratio
- solvency ratios
Related terms
See also
Commentary
Commonly used in corporate law and bankruptcy to gauge financial health; drafting should clarify the specific method of calculation applicable in context.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.