For purposes of long-term solvency analysis, the calculation of balance sheet ratios such as debt to equity or debt to total capital are of limited value and are used mostly as screening mechanisms to indicate whether further analysis is warranted.

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Balance sheet ratios such as debt to equity or debt to total capital can provide some insight into a company's financial leverage and risk, but they do not provide a complete picture of a company's long-term solvency. Further analysis, including cash flow analysis and trend analysis, is necessary for a more comprehensive understanding of a company's financial health and ability to meet long-term obligations. Therefore, these ratios are mostly used as screening mechanisms to indicate whether further analysis is warranted.

For Purposes of Long-Term Solvency Analysis, the Calculation of Balance