Resources ❯ Accounting Terms

Solvent

[SAHL-vuhnt]

What is the definition of Solvent?

Capable of meeting all financial obligations as they come due, thereby remaining financially stable.

Using Solvent in an Example

A company is considered solvent when it has enough assets to cover its liabilities, allowing it to continue operations and meet financial commitments without the risk of bankruptcy.

Using Solvent in a sentence

Despite the economic downturn, the company remained solvent, thanks to prudent financial management and a strong cash flow.

Related Terms

Surviving Spouse

A person whose spouse has died within the tax year and who may file a joint tax return for that year. Additionally, the surviving spouse can file joint returns for the next two years if they remain unmarried and maintain a household as the principal residence for a dependent child.

Swap

A financial contract in which two parties agree to exchange streams of payments over a specified period, based on different indices such as interest rates, foreign exchange rates, or equity indices, applied to a notional amount. Swaps typically do not involve the exchange of principal.

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