Commerce > Accountancy Class 12 > Solvency Ratios
Solvency Ratios Video Lecture - Accountancy Class 12 - Commerce
FAQs on Solvency Ratios Video Lecture - Accountancy Class 12 - Commerce
| 1. What are solvency ratios in commerce? |  |
Solvency ratios in commerce are financial metrics used to evaluate a company's ability to meet its long-term obligations and remain solvent. These ratios measure the company's ability to generate enough cash flow to cover its debt payments and other financial obligations.
| 2. How are solvency ratios calculated? | |
There are several solvency ratios used in commerce, including the debt-to-equity ratio, debt ratio, and interest coverage ratio. The debt-to-equity ratio is calculated by dividing the company's total debt by its total equity. The debt ratio is calculated by dividing the company's total debt by its total assets. The interest coverage ratio is calculated by dividing the company's earnings before interest and taxes (EBIT) by its interest expenses.
| 3. What do solvency ratios indicate about a company's financial health? | |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. A high solvency ratio indicates that the company has a strong financial position and is capable of repaying its debts. On the other hand, a low solvency ratio suggests that the company may face difficulties in meeting its debt obligations and may be at risk of insolvency.
| 4. How do solvency ratios differ from liquidity ratios? | |
Solvency ratios and liquidity ratios both assess a company's financial health, but they focus on different aspects. Solvency ratios measure a company's ability to meet long-term obligations, whereas liquidity ratios evaluate a company's ability to meet short-term obligations. Solvency ratios consider the company's overall financial stability, while liquidity ratios assess the availability of cash and other liquid assets to cover immediate expenses.
| 5. What are some limitations of solvency ratios? | |
While solvency ratios provide valuable insights into a company's financial health, they have some limitations. One limitation is that solvency ratios are historical measures and may not accurately reflect a company's current financial position. Additionally, solvency ratios do not consider qualitative factors such as management's ability to make informed financial decisions. Lastly, different industries may have varying ideal solvency ratios, so it's important to consider industry benchmarks when interpreting these ratios.
|
55 videos|90 docs|68 tests
|
Video Description: Solvency Ratios for Commerce 2023 is part of Accountancy Class 12 preparation.
The notes and questions for Solvency Ratios have been prepared according to the Commerce exam syllabus.
Information about Solvency Ratios covers all important topics for Commerce 2023 Exam.
Find important definitions, questions, notes, meanings, examples, exercises and tests below for Solvency Ratios.
Introduction of Solvency Ratios in English is available as part of our Accountancy Class 12 for Commerce & Solvency Ratios in
Hindi for Accountancy Class 12 course. Download more important topics related with notes, lectures and mock test series for
Commerce Exam by signing up for free.
Description
Video Lecture & Questions for Solvency Ratios Video Lecture | Accountancy Class 12 - Commerce - Commerce full syllabus preparation | Free video for Commerce exam to prepare for Accountancy Class 12.
Information about Solvency Ratios
Here you can find the meaning of Solvency Ratios defined & explained in the simplest way possible.
Besides explaining types of Solvency Ratios theory, EduRev gives you an ample number of questions to practice Solvency Ratios tests,
examples and also practice Commerce tests.
|
55 videos|90 docs|68 tests
|
Up next
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
Download free EduRev App
Track your progress, build streaks, highlight & save important lessons and more!
(Scan QR code)
|
|
Related Searches
mock tests for examination
,Viva Questions
,Solvency Ratios Video Lecture | Accountancy Class 12 - Commerce
,shortcuts and tricks
,Previous Year Questions with Solutions
,practice quizzes
,Important questions
,ppt
,study material
,past year papers
,video lectures
,Sample Paper
,Solvency Ratios Video Lecture | Accountancy Class 12 - Commerce
,Summary
,Extra Questions
,Objective type Questions
,Free
,Exam
,Solvency Ratios Video Lecture | Accountancy Class 12 - Commerce
,Semester Notes
,MCQs
;
Study Solvency Ratios on the App
Students of Commerce can study Solvency Ratios alongwith tests & analysis from the EduRev app,
which will help them while preparing for their exam. Apart from the Solvency Ratios,
students can also utilize the EduRev App for other study materials such as previous year question papers, syllabus, important questions, etc.
The EduRev App will make your learning easier as you can access it from anywhere you want.
The content of Solvency Ratios is prepared as per the latest Commerce syllabus.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup
