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}