Solvency Ratios and Coverage Ratios

These flashcards cover key terms and definitions related to solvency and coverage ratios that are crucial for understanding a company's financial health.

Debt-to-assets ratio

\frac{\text{Total Debt}}{\text{Total Assets}}$$

Debt-to-capital ratio

$$\text{Debt-to-capital ratio} = \frac{\text{Total Debt}}{\text{Total Debt} + \text{Total Equity}}$$

Debt-to-equity ratio

$$\text{Debt-to-equity ratio} = \frac{\text{Total Debt}}{\text{Total Shareholders' Equity}}$$

Financial leverage ratio

$$\text{Financial leverage ratio} = \frac{\text{Total Assets}}{\text{Total Equity}}$$

Debt-to-EBITDA

$$\text{Debt-to-EBITDA} = \frac{\text{Total Debt}}{\text{EBITDA}}$$

Interest coverage ratio

$$\text{Interest coverage ratio} = \frac{\text{EBIT}}{\text{Interest Expense}}$$

Fixed charge coverage ratio

$$\text{Fixed charge coverage ratio} = \frac{\text{EBIT} + \text{Lease Payments}}{\text{Fixed Charges}}$$

Average total assets

$$\text{Average total assets} = \frac{\text{Beginning Total Assets} + \text{Ending Total Assets}}{2}$$

Total shareholders' equity

$$\text{Total Shareholders' Equity} = \text{Total Assets} - \text{Total Liabilities}$$