Solvency Ratio

(redirected from Solvency Ratios)

Solvency Ratio

A measure of a company's ability to service debts, expressed as a percentage. It is calculating by adding the company's post-tax net profit and depreciation, and dividing the sum by the quantity of long-term and short-term liabilities; the resulting amount is expressed as a percentage. A high solvency ratio indicates a healthy company, while a low ratio indicates the opposite. A low solvency ratio further indicates likelihood of default. Different industries have different standards as to what qualifies as an acceptable solvency ratio, but, in general, a ratio of 20% or higher is considered healthy. Potential lenders may take the solvency ratio into account when considering making further loans.
References in periodicals archive ?
Release date- 26082019 - AM Best has assigned a stable market segment outlook to Bolivia's insurance industry, based on healthy growth, robust solvency ratios and a sufficient appetite from reinsurers.
Moody's also noted the solvency ratios of AIA's subsidiaries.
The China Banking and Insurance Regulatory Commission (CBIRC) said that the general and core solvency ratios of 178 insurance companies stood at 245 percent and 234 percent, respectively, which are considered to be safe levels.
The Deloitte whitepaper highlights enacted solvency ratios, calculations and sanctions that govern the insurance business in Iraq, distinguishing between solvency ratios mandated on both entity and policy levels.
Retail lenders and non-bank institutions can contribute to filling the SME lending gap given a difference in risk appetites and a more generous perspective on solvency ratios.
Median solvency ratios remain at satisfactory levels, though the reliance of some life insurers on transitional measures is high.
We expect both Solvency ratios to have improved during 2017, partially due to favourable interest rate changes.
' With the benefit of hindsight, the report is not only false but misleading as the stated solvency ratios are at variance with the true position.
As a result, and according to the general report of the Statutory Auditors and taking into account the loss recorded in 2016, the bank does not respect solvency ratios or concentration and risk division standards, hence the decision to increase its capital.
Liquidity ratios analyze the company's capacity to pay off its short-term debt obligations, whereas solvency ratios examine the company's ability to meet its long-term liabilities.
It expects the sale of Credit Agricole Bulgaria to result in a reduction of EUR160m (USD217m) in its risk-weighted assets, as well as to lower its solvency ratios by less than one basis point, the French banking group explained.
The French bank said the sale would lead to a EUR 160 M reduction in its risk-weighted assets while lowering its solvency ratios by less than 1 basis point.