A friend tells you that the best way to assess solvency is by comparing total debt to total assets Another friend says that solvency is measured by comparing total debt to total stockholders equity Which friend is correct ...

Both are right Many different ratios are used to assess the relative mix of a companys ...

A friend tells you that the best way to assess solvency is by comparing total debt to

Question:

A friend tells you that the best way to assess is by comparing total debt to total assets. Another friend says that is measured by comparing total debt to total stockholders’ equity. Which friend is correct?

Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...