Solvency

[SAHL-vuhn-see]

What is the definition of Solvency?

The state of being able to meet financial obligations as they come due, ensuring the ability to continue operations and meet both short-term and long-term debts.

Using Solvency in an Example

A company is considered solvent when it has sufficient assets to cover its liabilities, allowing it to satisfy debt obligations without selling off core assets. For instance, if a company can pay all its creditors, meet its payroll, and still have funds left for growth, it is demonstrating solvency.

Using Solvency in a sentence

During the financial review, the board was pleased to find that the company maintained its solvency despite the economic downturn.

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