solvency

noun
sol·​ven·​cy | \ ˈsäl-vən(t)-sē How to pronounce solvency (audio) , 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

While well-intentioned, the House legislation would prevent U.S. negotiators from effectively participating in international forums where global insurance-company solvency standards are set. WSJ, "Protecting U.S. State-Regulated Insurance," 10 Dec. 2018 Such reforms would assure long-term solvency, release more savings for productive investment and bring down the federal budget deficit. Alan Greenspan, WSJ, "How to Fix the Great American Growth Machine," 12 Oct. 2018 The deal’s size is likely to reassure investors of Argentina’s solvency. The Economist, "The IMF hands Mauricio Macri a vote of confidence," 8 June 2018 That would give Tesla a nice cash cushion and reassure everyone involved about Tesla's solvency. Timothy B. Lee, Ars Technica, "Tesla’s cash crunch, explained," 26 July 2018 The long-term solvency is also affected by lawmakers’ repeal in February of a controversial Obamacare effort to cut spending known as the Independent Payment Advisory Board, according to the official. Anna Edney, Bloomberg.com, "Medicare Fund Falls Short in 2026, Sooner Than Last Forecast," 5 June 2018 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

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

solvate

Solvay process

solve

solvency

solvend

solvent

solvent dye

Statistics for solvency

Last Updated

15 Mar 2019

Look-up Popularity

Time Traveler for solvency

The first known use of solvency was circa 1727

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More Definitions for solvency

solvency

noun

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

solvency

noun

English Language Learners Definition of solvency

: the state of being able to pay debts

solvency

noun
sol·​ven·​cy | \ ˈsäl-vən-sē How to pronounce solvency (audio) \

Legal Definition of solvency

: the quality or state of being solvent

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More from Merriam-Webster on solvency

Spanish Central: Translation of solvency

Nglish: Translation of solvency for Spanish Speakers

Britannica English: Translation of solvency for Arabic Speakers

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