Here, solvent means “able to pay one’s debts,” so when it comes to the acid test ratio, solvency is a good thing, and results of 1 or higher indicate short-term solvency. To calculate a ...

Ratios of 1 or higher indicate short-term solvency. Because the current ratio compares short-term assets directly to short-term liabilities, a ratio of 1 or more indicates that a company would be ...

However, the main formula for calculation is listed below: Solvency Ratio = (Net Income + Depreciation) / All Liabilities (Short-term + Long-term Liabilities) Since the denominator comprises ...