How is solvency of a firm assessed by financial statement analysis?

It is through the solvency ratios (For Example Debt-Equity Ratio , Total Asset to Debt Ratio , Proprietary Ratio etc), that the solvency of a business is assessed by financial statements . For the detailed discussion on solvency ratio you can access the study material on our website by following the below mentioned path:

Accountancy XII => Study Material => Book 2 (Company Accounts and Analysis of Financial Statements) => Accounting Ratio (Chapter 5) => Solvency Ratio (Lesson 3)