Leverage Ratios or Solvency Ratio Calculation
Leverage Ratios Calculator
An online Solvency Ratio calculator to assess the financial health of your business.
Solvency Ratio Formula
Solvency Ratio = (Net Income + Depreciation) / (All Liabilities)
Net income: This is the company profit after tax.
Depreciation: This is the decrease in value of the company assets over time.
All liabilities: All long term plus , all short-term debts.
Example
| (in thousands) | Microsoft | |
| Net Income | $2,000 | $9,000 |
| Depreciation | $1,600 | $6,500 |
| Net Income + Depreciation (A) | $3,600 | $15,500 |
| Short-term Liabilities | $1,200 | $12,000 |
| Long-term Liabilities | $13,000 | $6,000 |
| All Liabilities (B) | $14,200 | $18,000 |
| Solvency Ratio (A / B) | 25% | 86% |