Solvency and leverage ratios measure how well a company is able to meet it’s long-term debt commitments. In this section, we cover the most important solvency ratios you need to know.

What are coverage ratios?

When you invest in companies or analyse them for others to invest in you need to be able to separate companies with a healthy and manageable amount of debt from companies that are overextending themselves.

Leverage from debt is very useful for businesses to finance their operations, but businesses that are too highly leveraged are at risk of not being able to cover their debts and may be forced to sell assets or, in extreme cases, declare bankruptcy,

Coverage ratios are a useful way that you can measure these risks to determine and decide whether a company has the ability to pay its existing debts.

List of coverage ratios

Below is the complete list of coverage ratios we have covered. Each will provide a detailed overview of the ratio, what it’s used for, and why.

They also explain the formula behind the ratio and provide examples and analysis to help you understand them.

More Financial Ratios

Attend Our Next Webinar

Attend Our Next Webinar

Join our next Sustainable Investing 101 webinar, get our favorite DIY options, and walk through how we build our portfolios.

Watch Now
Get Our Newsletter

Get Our Newsletter

Go a level deeper with us and investigate the potential impacts of climate change on investments like your retirement account.

Talk To A Human

Talk To A Human

Joining a new investment service can be intimidating. We’re here for you. Click below to email us a question or book a quick call.

Ask a Question

Topics

Sustainable Investing Topics

View our list of some topics below.

}