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What Does Solvency Ratio Mean?

mean ratio solvency
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What Does Solvency Ratio Mean?

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One of many ratios used to measure a company’s ability to meet long-term obligations. The solvency ratio measures the size of a company’s after-tax income, excluding non-cash depreciation expenses, as compared to the firm’s total debt obligations. It provides a measurement of how likely a company will be to continue meeting its debt obligations.

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