Asset adequacy ratio

This ratio measures in percentage terms the impact of the total debts (current liabilities , non-current liabilities plus accruals) over the equity net of shareholdrs receivables and dividends.

TOTAL DEBTS / NET EQUITY'S BOOK VALUE

It can be considerd a warning indicator for creditors in fact it is provided by the Italian's Code of Crisis and Insolvency as it aims to express the degree of adequacy of the enterprise. However the warning threshold vary based on the business industry and it can rapidly change in consideration of macro economic changes.