sol·ven·cy | \ˈsäl-vən(t)-sē, ˈsȯl-\

Definition of solvency 

: the quality or state of being solvent

Examples of solvency in a Sentence

They reviewed financial records to measure the borrower's solvency.

Recent Examples on the Web

Plans that are self-funded, where an association assumes the final risk of providing the benefits, must comply with amendments passed in 1983 that allow states to enforce insurance laws, including those regarding liquidity and solvency. Stephanie Armour, WSJ, "New Trump Administration Rule to Expand Access to Health Plans Without ACA Protections," 19 June 2018 The deal has helped reassure investors about Argentina’s solvency. The Economist, "Argentina’s central-bank president resigns," 15 June 2018 By comparison, in 2000, when the national unemployment rate matched today’s 4.1%, 30 states met the solvency standard. Sarah Chaney, WSJ, "A Downturn That Costs Jobs Could Catch the U.S. Unprepared," 22 Apr. 2018 The agreement gives Greece a clear path till 2032, but doesn’t end doubts about its long-term solvency. Nektaria Stamouli, WSJ, "Germany Delays Greece’s Final Bailout Payment," 12 July 2018 State insurance regulators are concerned about association health plans because similar plans in the past had problems with financial solvency and even fraud. Ricardo Alonso-zaldivar,, "Lower costs, fewer benefits in new health insurance option," 19 June 2018 State insurance regulators are concerned about association health plans because similar plans in the past had problems with financial solvency and even fraud. Ricardo Alonzo-zaldivar, USA TODAY, "New health insurance option from Trump administration would lower cost for fewer benefits," 19 June 2018 In fact, the annual projected return on asset assumption, or ROA, to ensure solvency is only 6.5% for each of these plans. Edward Mckinley, kansascity, "KC union retirees join rally in Ohio for pension fix — or is it a bailout?," 13 July 2018 For more than two decades, presidents of both political parties and Congress have sporadically assembled high-level commissions to explore ways to prolong the solvency of one or both programs. Amy Goldstein, Washington Post, "A crucial Medicare trust fund will run out three years earlier than predicted, new report says," 5 June 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'solvency.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of solvency

circa 1727, in the meaning defined above

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Dictionary Entries near solvency


Solvay process





solvent dye

Statistics for solvency

Last Updated

11 Oct 2018

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Time Traveler for solvency

The first known use of solvency was circa 1727

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Financial Definition of solvency

What It Is

Solvency is a company’s ability to pay its debts as they become due.

How It Works

Solvency measures a company's ability to meet its financial obligations.
Short-term solvency is often measured by the current ratio, which is calculated by dividing current assets by current liabilities.

Longer-term solvency is evaluated using the solvency ratio, which divides the company’s net worth by its total assets.

A business can be insolvent but still profitable.  For example, a company may borrow money to expand its operations and be unable to immediately repay its debt from existing assets. In this instance, the lender assumes cash flows will increase because of the business expansion and enable the company to comfortably meet payment obligations in the future.

Why It Matters

A company's solvency determines its ability to service debts and achieve long-term growth and profitability. A business that is completely insolvent is unable to pay its debts and will be forced into bankruptcy. Investors should examine all the financial statements of a company to make certain the business is solvent as well as profitable.

Source: Investing Answers



English Language Learners Definition of solvency

: the state of being able to pay debts


sol·ven·cy | \ˈsäl-vən-sē \

Legal Definition of solvency 

: the quality or state of being solvent

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Spanish Central: Translation of solvency

Nglish: Translation of solvency for Spanish Speakers

Britannica English: Translation of solvency for Arabic Speakers

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one that holds something together

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