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Generally both word meaning as per accounting a Firms' ability to pay there dues
But Difference is Liquidity Ratio means A firms' due can able to pay within year or within ine Fiscal year
Solvency ratio means more than one year or accounting period a firms' can able to pay there dues more than one year
Liquidity is the availability of cash in hand as well as at bank solvency is the ability of a company to meet its long-term financial obligations.
liquidty
Current ratio = Current assets / Current liabilities
measures a company’s ability to meet its short-term obligations with its most liquid assets . more than 1 it will be good
Solvency ratio1- leverage ratio : total debt / total equity it measure risk from fianace company when result equal more than 1 risk increase this ratio used for credit risk department in banks to approve or reject loans for companies
2-Debt to assets = Total debt / Total assets
measures the percentage of a company’s assets that have been financed with debt ( short& long term )A higher ratio indicates a greater degree of leverage
3-Interest coverage ratio = Operating income (or EBIT) / Interest expense
its measure if company can covered interest expense from debt by operation Income
