[Verse 1] When creditors come knocking at your door And shareholders are worried to the core We need to check the balance on the scale Between the debt and equity tale The debt-to-equity will show us true If leverage helps or hurts what we pursue Take total debt divided by the worth That shareholders have claimed since company birth [Chorus] Solvency ratios tell the story clear Can the company survive another year Debt-to-equity and coverage combined Give us the picture of financial mind Lower is better for the debt we hold Higher coverage keeps the story bold Long-term stability starts to unfold When these ratios are under control [Verse 2] Interest coverage is the second key Can earnings pay what creditors decree Take EBIT from the income statement line Divide by interest expense to find the sign A ratio above two-point-five or more Means the company can weather any storm But when it falls below that safety net The warning bells ring out about the debt [Chorus] Solvency ratios tell the story clear Can the company survive another year Debt-to-equity and coverage combined Give us the picture of financial mind Lower is better for the debt we hold Higher coverage keeps the story bold Long-term stability starts to unfold When these ratios are under control [Bridge] Times interest earned is another name For coverage ratio in this financial game Industry standards help us understand What levels keep a business strong and grand Manufacturing might need different goals Than service companies with different roles Context matters when we analyze The numbers that before our eyes arise [Verse 3] Watch the trends across the years gone by Are ratios improving or awry A company with rising debt-to-equity Might signal trouble with liquidity But coverage ratios climbing up the chart Show management is playing the smart part Together these two metrics paint the scene Of whether balance sheets are strong and clean [Chorus] Solvency ratios tell the story clear Can the company survive another year Debt-to-equity and coverage combined Give us the picture of financial mind Lower is better for the debt we hold Higher coverage keeps the story bold Long-term stability starts to unfold When these ratios are under control [Outro] CPA knowledge in your hands today Solvency analysis will light the way Debt management through ratio sight Keeps financial futures burning bright
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