Solvency ratio
Solvency measures the share of the balance sheet financed by the company's own equity rather than by debt. It is the first ratio a banker or supplier looks at.
Formula
The codes are those of the National Bank of Belgium's annual-accounts formats; they are the ones Idonis uses for every company profile.
How to read it
The higher the ratio, the more the company funds its business with its own means: its creditors are better covered if activity slows.
A negative ratio means negative equity: debts exceed assets. The Belgian Code of Companies and Associations then requires the board to follow the so-called alarm-bell procedure.
The right level depends on the sector: real estate and capital-intensive businesses borrow more than service companies. Always compare with the sector median.
Solvency ratio: medians of the main Belgian sectors
Computed by IdonisFor financial year 2024, in the sectors with the most companies: a quarter of companies below the 1st quartile, half below the median, three quarters below the 3rd quartile.
| Sector | 1st quartile | Median | 3rd quartile | Companies |
|---|---|---|---|---|
| Activities of head offices and management consultancy | 26.3% | 57.2% | 79.5% | 50,285 |
| Real estate activities | 6.2% | 34.4% | 70.1% | 49,341 |
| Specialised construction activities | 23.6% | 45.6% | 68.4% | 46,836 |
| Retail trade | 9.3% | 34.3% | 62.2% | 42,627 |
| Human health activities | 39.4% | 68.7% | 85.6% | 40,019 |
| Wholesale trade | 14.2% | 41.7% | 69.9% | 34,495 |
| Computer programming, consultancy and related activities | 28.8% | 59.3% | 79.8% | 25,815 |
| Financial service activities, except insurance and pension funding | 24.0% | 56.5% | 83.8% | 25,192 |
| Food and beverage service activities | -1.2% | 29.4% | 58.1% | 24,034 |
| Legal and accounting activities | 26.3% | 55.5% | 77.8% | 20,712 |
Medians computed by Idonis from annual accounts filed with the National Bank, all sizes combined. The same panel is the sector benchmark on every company page. Belgian companies by sector →
Frequently asked questions
How do I calculate the solvency ratio of a Belgian company?
Divide equity (code 10/15 in the annual accounts) by total assets (code 20/58). For example, €300,000 of equity on a €1,000,000 balance sheet gives 30%.
What is a good solvency ratio?
There is no universal threshold: it depends on the sector. The table on this page gives the median and quartiles of the main Belgian sectors; a company below its sector's first quartile is less capitalised than three quarters of its peers.
What is the difference between solvency and liquidity?
Solvency looks at the balance-sheet structure (equity versus debt) over time; liquidity looks at the ability to pay short-term debts with short-term assets.