Solvency
/ˈsɒlvənsi/
Definitions
- (n.) The ability of a person or entity to meet its financial obligations as they come due.
The company's solvency was questioned after its debts exceeded its assets.
- (n.) The state of having more assets than liabilities, indicating financial health.
Solvency is crucial for a business to secure loans and investment.
Related terms
See also
Commentary
Solvency differs from liquidity in that it focuses on overall financial health rather than short-term cash flow.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.