Learn in the textbookBusiness Analysis Metrics
DefinitionSafety (安全性) is the business-analysis viewpoint that looks at whether a company can keep repaying loans and paying bills without delay, that is, its ability to pay and financial stability.
ExplanationIt is judged from the balance between the assets on hand and the liabilities to be repaid, and from the share of capital that is equity, which needs no repayment. The current ratio, covered next, is the typical measure of short-term capacity to pay, and the equity ratio (equity ÷ total capital × 100) is the typical measure of the stability of capital as a whole, and for both a higher value means more safety.
AnalogyHowever high the monthly salary, a household is in danger if its savings cannot cover next month's bills. This viewpoint asks whether payments can keep being made.