To use this calculator, input your company's financial data such as total liabilities, total assets, net income, depreciation, amortization, total equity, and net sales. The calculator will provide you with the solvency ratio and other key financial metrics.
The solvency ratio is calculated as: (Net Income + Depreciation + Amortization) / Total Liabilities. Other formulas include: Current Ratio = Total Assets / Total Liabilities, Debt to Equity Ratio = Total Liabilities / Total Equity, Return on Equity = Net Income / Total Equity, and Net Profit Margin = Net Income / Net Sales.
Suppose a company has $500,000 in total liabilities, $1,000,000 in total assets, $200,000 in net income, $50,000 in depreciation, $30,000 in amortization, $300,000 in total equity, and $1,500,000 in net sales. The solvency ratio would be calculated as ($200,000 + $50,000 + $30,000) / $500,000 = 0.56 or 56%.
While the solvency ratio is a useful indicator, it should be considered alongside other financial metrics for a comprehensive view of financial health. Be aware of industry-specific factors that may affect these ratios.
For more financial insights, check out our ROI Calculator and Profit Margin Calculator.