Solvency

Solvency refers to an individual or organization's ability to meet its long-term financial obligations. In simpler terms, it means having enough assets (what you own) to cover your liabilities (what you owe). If a person or company is solvent, they can pay off their debts without running into financial trouble. If they owe more than they own, they are considered insolvent, which can lead to bankruptcy. Solvency is an important measure of financial health, indicating stability and the ability to continue operations without falling into debt.