Solvency

/ˈsɒlvənsi/

Meaning & Definition

noun

The ability of a company or individual to meet its long-term financial commitments.

The company's solvency was questioned after it reported several years of losses.

The state of being solvent, particularly in reference to financial obligations.

Maintaining solvency is critical for any business operating in a competitive market.

A financial condition in which assets exceed liabilities.

The firm was able to demonstrate its solvency by presenting a detailed balance sheet.

The capacity to pay off debts, often assessed through various financial ratios.

Investors are often concerned about a firm's solvency before making significant investments.

From Latin solvency, from solvĕre which means 'to loosen, to pay.'

solvency ratio

A financial metric used to measure the company's ability to meet its long-term debt obligations.

insolvency proceedings

Legal processes that take place when a company cannot pay its debts.

solvent entity

An organization that has a positive net worth and can meet its financial obligations.

insolvency

The state of being unable to pay debts.

liquidation

The process of winding up the affairs of a company and distributing its assets to claimants.

debts

Money that is owed or due.

Broke but not stressed.

She’s solvent for now, but if she doesn’t get a job soon, she might be in trouble.

In the clear financially.

Thanks to my savings, I'm still solvent after that big expense.