Register now or log in to join your professional community.
When looking at a company's solvency, you're assessing the company's ability to meet its long term loan obligations. Total debt/total asset may be a good measure to analyse solvency.
It is equally important to assess a company's liquid position. it's always best to assess its standing through different liquify rations - current ration, acid test ratio etc.
Often people assume solvency and liquidity are the same, but in reality the y are completely separate. Solvency is long-term where as liquidity is short-term.
Hope this helped.
