FINAL TEST : SOLVENCY ANALYSIS-DEBT TO EQUITY

RAFIDAH SHALEH

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SOLVENCY ANALYSIS
DEBT TO-EQUITY RATIO

A.    What is Solvency Analysis? 

Analysis of solvency is an analysis of the company's ability to meet all its obligations, both short-term liabilities and long term liabilities.

B.    Solvency Analysis

C.    Solvency Analysis Formula

D.    Debt to-equity ratio

On this policy, management can sell assets, especially long-term assets are not productive, then the sale of these assets are used to reduce or buy shares that circulating . The Formula for this ratio is :

E.    The Example

F.    Conclusion

Based the Calculation, in 2009, the composition of debt and equity is 1.99. This shows that every Rp 1.00 equity is equal with Rp 1.99 Debt . So when the company went into liquidation, there is still excess equity over debt that must be covered.

Results of these calculations indicate that in 2008, the company was likely not solvable because debt financing is greater than equity financing