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.

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Short-term solvency ratios

References in periodicals archive ?

At the end of June 2019, Sampo's solvency ratio, according to the Solvency II directive, amounted to 137%.

Sampo to distribute extra dividend in the form of Nordea shares

Welcoming the rating, Jean-Louis Laurent Josi, chief executive officer at Oman Insurance said, 'In 2018, we have increased our solvency ratio to 214 per cent, our highest solvency of the past years, which confirms our strong ability to meet our policyholders' obligations.'

S and P CONFIRMS 'A-' RATING FOR OMAN INSURANCE CO

The regulator said that the solvency ratio has gone below 1 percent, which is not as per mandatory requirements.

Indian regulator concerned about National Insurance Company's heath

This operation further strengthens Generali Group's capital position with an estimated increase of around 1 percentage point on the Group Regulatory Solvency Ratio and allows to concentrate on the core business.

Generali to Sell Life Run-Off Portfolio of UK Branch to Reinsurance Group of America

YDPCI's score on Fitch's Prism Factor-Based Capital Model (FBM) was 'Adequate' at end-1H18 and its comprehensive solvency ratio under the China Risk Oriented Solvency System remained stable at 154% (2017:155%).

Fitch Affirms Yingda Taihe Property Insurance at 'A-'; Outlook Stable

The solvency ratio was at 2.06 as against the regulatory requirement of 1.50.

SBI Life Insurance reports 30 pct Y-o-Y growth

After years of generous distribution, at the end of 2016, the bank posted a solvency ratio of 10.66% for a regulatory minimum of 10%.

Tunisia: Attijari bank to distribute dividend of 1.2 dinar, increase capital

3, the classification should incorporate features like Sales, Solvency ratio, ROA, Operation revenues and EBIT including metrics.

PREDICTING BANKRUPTCY OF MANUFACTURING COMPANIES IN EU

Businessmen stress that the low credit activity is a result of the low solvency ratio of companies, and, mainly a result of the political crisis

High demand for consumption loans

The shares responded to the results by falling heavily amid concerns about Admiral's solvency ratio - down from 206% at the end of December to 180% at the end of June, driven by lower post-Brexit interest rates.

COMPANY FOCUS: ADMIRAL GROUP

In spite of a 4% increase in profits and a 23% rise in dividends, Admiral suffered a significant fall in its solvency ratio, which dropped from 206% to 180%.