👉 Solvency refers to a financial condition in which a company or individual is able to meet its obligations and commitments. It involves a balance between assets, liabilities, and equity. In other words, it means that a company or individual has sufficient funds available to cover its debts and expenses. Solvency can be determined through various methods such as income statements, balance sheets, and cash flow statements. It is crucial for financial decision-making as it helps in understanding the financial health of an organization.
