Cash-flow insolvency
A position where a company cannot pay debts as they fall due, even if it may own assets with significant value.
Related terms
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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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Liquidity
The ability to meet short-term payments as they fall due, using cash or assets that can quickly be converted into cash.
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Balance-sheet insolvency
A position where a company’s liabilities exceed the value of its assets, taking relevant future and contingent liabilities into account.
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