Plain-language questions
Ask for solvency ratio (equity ratio) per month, customer or product in the SQL Explorer with AI. The AI writes the SQL, you see the query and run it yourself; the AI only receives metadata.
KPI · Finance
Solvency ratio (equity ratio): formula and example.
The solvency ratio, in its most common form the equity ratio, is equity divided by total assets. It shows how much of what the business owns is financed with its own money rather than borrowed money, and how much buffer there is to absorb losses. Banks and suppliers use it to assess creditworthiness.
Solvency ratio (equity ratio) formula
Equity ÷ total assets × 100%
Worked example
At the end of 2025 Acme Groothandel had equity of €2,000,000 and total assets of €5,000,000. The solvency ratio is €2,000,000 ÷ €5,000,000 × 100% = 40%.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
A higher solvency ratio means less reliance on borrowed money and more resilience when things go wrong. A lower ratio can be a deliberate choice to grow with debt, but makes the business more sensitive to interest rates and losses. Compare it with previous years and with the requirements in your financing agreements; what is appropriate varies widely by sector.
Pitfalls with solvency ratio (equity ratio)
- Mixing definitions: equity ÷ total assets, equity ÷ liabilities and cash-flow-based solvency ratios give very different numbers.
- Treating subordinated loans or intangible assets inconsistently; banks often adjust for them.
- Comparing an interim balance sheet without year-end adjustments with the annual accounts.
SQL & DAX
Calculating solvency ratio (equity ratio) in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
WITH bal AS (
SELECT account_group, SUM(amount) AS balance
FROM gl_entries
WHERE entry_date <= current_date
AND account_group IN ('cash', 'receivables', 'inventory', 'other_current_assets', 'fixed_assets', 'equity')
GROUP BY account_group
)
SELECT SUM(balance) FILTER (WHERE account_group = 'equity') AS equity,
SUM(balance) FILTER (WHERE account_group <> 'equity') AS total_assets,
ROUND(100.0 * SUM(balance) FILTER (WHERE account_group = 'equity')
/ NULLIF(SUM(balance) FILTER (WHERE account_group <> 'equity'), 0), 1) AS solvency_pct
FROM bal;Balance = CALCULATE(SUM(GL[Amount]), FILTER(ALL('Date'), 'Date'[Date] <= MAX('Date'[Date])))
Solvency % =
DIVIDE(
CALCULATE([Balance], GL[AccountGroup] = "equity"),
CALCULATE([Balance], GL[AccountGroup] IN {"cash", "receivables", "inventory", "other_current_assets", "fixed_assets"})
)In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate the solvency ratio?
The most common formula is equity divided by total assets, multiplied by 100%. With €2,000,000 of equity and total assets of €5,000,000, the solvency ratio is 40%. Other versions exist, so always state which formula you use.
What is the difference between solvency and liquidity?
Solvency is about the long term: can the business pay all its debts? Liquidity is about the short term: can it pay the debts falling due within a year? A business can be solvent and still be short of cash for a while.
What is the difference between the solvency ratio and the debt-to-equity ratio?
The solvency ratio compares equity with total assets, the debt-to-equity ratio compares liabilities with equity. They measure the same thing from a different angle: with a 40% solvency ratio, debt-to-equity is 60 ÷ 40 = 1.5.
Further reading
- KPI libraryFinancial KPIs: formulas and examplesFinancial KPIs show how profitable, liquid and solvent an organisation is. The data usually comes from your accounting package or ERP: general ledger entries, invoices and open items.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
Use AI on your own data. Securely, and without the headache.
In an online demo we show how ENABLE makes your data securely available and how you build on it: describing an app in the AI Builder, plain-language questions, dashboards and APIs. And how we set it up and manage it for you.