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A solvency ratio measures a insurers risk of claims it cannot absorb. Basically it is its capital relative to premiums written. One could say it shows that the insurer could cover all its policies.

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12y ago

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What solvency ratio means?

The term 'solvency' means the ability to meet maturing obligations as they come due


What is a useful measure of solvency?

Debt to total assets ratio


Conclusion on the company's solvency based on the ratios calculated?

The Long-Term Solvency Ratio is developed from the statement of financial position (or balance sheet) but uses this formula: (Lawrence L Martin, 2001) Financial Management for Human Services administrators states:Total assets divided by Total liabilities = Long-term solvency rationThe long-term solvency ratio should be at least 1.0 as a rule, but the higher the better


What is the common measure of solvency?

The common measure of solvency is the debt-to-equity ratio. This ratio compares a company's total debt to its total equity, indicating the extent to which a company is reliant on debt financing to operate. A lower ratio is generally considered more favorable as it suggests a lower risk of insolvency.


Classification of Ratio Analysis?

1. Ratios for management a. Operating ratio b. Debtors turnover ration c. Stock turnover ratio d. Solvency ratio e. Return on capital 2. Ratios for creditors a. Current ratio b. Solvency ratio c. Fixed asset ratio d. Creditors turnover ratio 3. Ratios for share holders a. Yield ratio b. Proprietary ratio c. Dividend rate d. Capital gearing e. Return on capital fund.


How ratios in ratio analysis are computed and used?

Ratio analysis is used to evaluate relationships among financial statements items; these ratios are used to identify trends overtime for one company or to compare two or more companies at a point in time. It focuses on three aspects of business: liquidity, profitability and solvency.


What is co solvency?

The phenomenon of increasing solubility of poorly soluble substance by the used of more then one solvent is known as co-solvency.


How many types of ratio?

Generally, there are 4 types of finance ratios, (if thats what you want). (A) LIQUIDITY RATIO (B) LONG TERM SOLVENCY AND STABILITY RATIO (C) PROFITABILITY & EFFICENCY RATIOS (D) INVESTORS OR STOCK MARKET RATIOS.


Which document should be used to determine a person's solvency?

balance sheet


What solvency certificate contains?

i want an model of solvency certificate


Last year MBA 1 st sem quction 2005 to 2008?

What ratio would you calculate to assess liquidity and solvency position of a company ?


Making sentence for the word solvency?

You cannot buy a house unless you have financial solvency.