WordValesolvency
the ability to meet long-term financial obligations
In more detail
1. (noun) the ability of a person or company to pay all their debts
Examples
- 1. The bank checked the company's solvency before approving the loan.
How to use solvency
Solvency refers to a financial entity's capacity to meet long-term obligations and is primarily used in formal financial and legal contexts. It differs from liquidity, which concerns the ability to pay short-term debts; a company can be solvent but illiquid. The term is commonly used by banks, accountants, regulators, and when discussing corporate or personal financial health.
Common phrases
- solvency ratio
- maintain solvency
- solvency crisis
- solvency regulations
- solvency requirements
Synonyms
financial stability · creditworthiness · ability to pay debts · liquidity
Opposites
insolvency · bankruptcy
Word family
solvent (adjective/noun) · insolvent (adjective) · insolvency (noun)
A common mistake
Learners often confuse solvency with liquidity; solvency is about long-term debt capacity, while liquidity is about immediate cash availability.
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