The ability of a company to meet its long-term financial obligations.

Solvency refers to the financial condition of a business and its ability to meet its long-term financial obligations. It indicates whether a company has sufficient assets to cover its debts and continue operating in the long run. Small business owners can assess their solvency by comparing their total assets to their total liabilities. Being solvent is crucial for the sustainability and stability of a business. It demonstrates that a company has the financial capacity to repay its debts and fulfill its financial commitments over time. Lenders, investors, and stakeholders often consider solvency when evaluating the financial health and creditworthiness of a business.