In this paper, the relationship between two groups of indicators, specifically between indebtedness and insolvency, is investigated. In the first part of the paper, indebtedness and its indicators, as well as solvency and its indicators, are defined. Previous research has shown that there is a connection between indebtedness and insolvency. High levels of debt lead a company to insolvency. In the second part of the paper, an empirical study was conducted on a sample of 500 small and medium-sized enterprises in the Republic of Croatia, consisting of 250 solvent and 250 insolvent enterprises. Basic statistical indicators were calculated for the observed indicators: arithmetic mean, standard deviation, and median. The study was conducted using a t-test to examine whether there is a statistically significant difference in the average value of indicators for solvent and insolvent enterprises. Eleven indicators were used for the analysis: the ratio of retained earnings to assets, the ratio of cash to liabilities, the debt ratio, the debt-to-equity ratio, the ratio of long-term liabilities to current assets, the ratio of short-term liabilities to equity, the ratio of short-term liabilities to assets, the self-financing coefficient, the ratio of total loans to assets, the ratio of total loans to revenue, and the ratio of liabilities to revenue. Based on the conducted analysis, it was concluded that there is a statistically significant difference in the average value of the indicators between solvent and insolvent enterprises. Excessive indebtedness leads a company to insolvency.