Debts to Total Funds or Solvency Ratio:

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Solvency is the term which is used to describe the financial position of any business which is capable to meet outside obligations in full out of its own assets. So this ratio establishes relationship between total liabilities and total assets.

Formula:

Debts to Total Funds or Solvency Ratio = Total liabilities / Total assets

More study material from this to

More study material from this topic:

	Meanings, Nature and Usefulness of Ratios Analysis
	Interpretation of Ratios
	Important Factors for Understanding Ratios Analysis
	Significance and Usefulness Ratios Analysis
	Classification of Ratios
	Analysis of Short Term Financial Position or Test of Liquidity
	Current Ratio
	Quick/Acid Test/Liquid Ratio
	Absolute Liquid Ratio
	Inventory/Stock Turnover Ratio
	Debtors / Receivable Turnover Ratio
	Creditors / Payables Turnover Ratio
	Working Capital Turnover Ratio
	Profitability Ratios
	Gross Profit Ratio (GP Ratio)
	Operating Profit Ratio
	Net profit ratio (NP ratio)
	Earnings Per Share Ratio
	Operating ratio
	Expense ratio
	Solvency ratios - Test of Long Term Solvency
	Debt-equity Ratio
	Debt Service Ratio or Interest Coverage Ratio
	Fixed Assets Ratio
	Debts to Total Funds or Solvency Ratio
	Reserves to Capital Ratio
	Capital Gearing Ratio
	Proprietary Ratio
	Accounting Ratios Formulas
	Limitations of Ratios Analysis

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