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 Social Security requires changes to ensure solvency and to better protect against poverty in old age, Americans’ retirement incomes and retirement savings have never been stronger. Andrew G. Biggs, National Review, "We Do Not Need to Expand Social Security," 5 Dec. 2019 Warren's plan would provide bigger and more progressive benefit increases, but would only extend the system's solvency through 2054. Monique Morrissey For Cnn Business Perspectives, CNN, "These Social Security plans could help solve America's retirement crisis," 17 Oct. 2019 While not the life-or-death gamble of the Model 3, when the company’s solvency hung in the balance, Tesla needs to sustain its growth. Michael J. Coren, Quartz, "Tesla’s new Cybertruck is here," 21 Nov. 2019 Specifically, the researchers looked at what could keep this cohort working longer - something that could have substantial economic benefits given the U.S.'s aging population, slowing population growth and Social Security solvency challenges. Sarah Green Carmichael, chicagotribune.com, "Older workers, like millennials, just want a little flex time," 17 Oct. 2019 The marked increase in funding costs suggests capital markets have taken a dimmer view of the company’s solvency prospects. Christiaan Hetzner, Fortune, "Aston Martin Went Public a Year Ago—and Then the Wheels Fell Off," 26 Sep. 2019 Each song could represent a room in this haunted house, a depiction of African-American life on the margins of financial solvency and psychic equilibrium. Greg Kot, chicagotribune.com, "10 best albums of 2019 in rock-pop-rap," 2 Dec. 2019 Also working to balance solvency and morality is the Rev. Donna Schaper, the senior pastor at Judson Memorial Church in Greenwich Village, where five congregations share a single space to help defray costs. New York Times, "For Churches, a Temptation to Sell," 4 Oct. 2019 Meanwhile, House Democrats are considering their own legislation that would extend Social Security’s solvency and increase benefits with tax increases on wealthy and middle income earners, according to the Wall Street Journal. BostonGlobe.com, "Ahead of Thursday’s Democratic presidential debate, Senator Elizabeth Warren rolled out," 13 Sep. 2019

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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Time Traveler for solvency

Time Traveler

The first known use of solvency was circa 1727

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Statistics for solvency

Last Updated

4 Jan 2020

Cite this Entry

“Solvency.” The Merriam-Webster.com Dictionary, Merriam-Webster Inc., https://www.merriam-webster.com/dictionary/solvency. Accessed 18 January 2020.

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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
How to pronounce solvency (audio)

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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