Solvency
The ability of a company to meet all its obligations. |
Similar financial terms
Accounting insolvencyTotal liabilities exceed total assets. A firm with a negative net worth is insolvent on the books.
Technical insolvency
Default on a legal obligation of the firm. For example, technical insolvency occurs when a firm doesn't pay a bill.
Short-term solvency ratios
Ratios used to judge the adequacy of liquid assets for meeting short-term obligations as they come due, including (a) the current ratio, (b) the acid-test ratio, (c) the inventory turnover ratio, and (d) the accounts receivable turnover ratio.
