Solvency
The ability to meet debts and financial obligations under the relevant financial and legal tests.
Related terms
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Insolvency
A financial state in which a person or business cannot meet debts as required, or a company meets another statutory insolvency test. It is not the same thing as liquidation.
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Net assets
The value remaining after total liabilities are deducted from total assets.
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Cash flow
Money moving into and out of a business or household. Strong profit on paper does not always mean there is enough cash to pay bills when they fall due.
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