is solvency the same as debt 
solvency is related to debt as solvency is the measurement of how well a company will be able to pay off its debts in a lot of cases it makes sense for a company to borrow money in other cases it may be cheaper to take on debt rather than issue stock in the long run however it is important that a company keeps track of its future obligations and whether it will be able to pay long term debt as it comes due although solvency and debt are not the same thing they are very closely related the bottom linesolvency ratios are financial measurements that usually look at a company s total assets total debt or total equity to better understand the company s financing structure this financial structure plays a critical part in knowing whether the company will be able to pay its long term debts as they come due and have enough money in the long run the most common solvency ratios are the debt to equity ratio the debt to assets ratio and and the interest coverage ratio 