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  3. solvency ratios, including the debt-to-equity rati

Solvency ratios, including the debt-to-equity ratio and interest coverage ratio, measure a company's long-term financial...

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Finance

Solvency ratios, including the debt-to-equity ratio and interest coverage ratio, measure a company's long-term financial stability and ability to meet long-term obligations. These ratios assess the extent of a company's leverage and its capacity to sustain operations over the long term. A lower debt-to-equity ratio indicates less reliance on debt financing, reducing financial risk. Solvency ratios are crucial for creditors and investors to evaluate the risk of insolvency and to ensure that the company can generate enough earnings to cover its debt commitments.

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