solvency assessment

Solvency assessment is the process of evaluating whether a company can meet its long-term financial obligations. It involves examining the company's assets (what it owns) and liabilities (what it owes) to determine if its total assets exceed its liabilities. If a company is solvent, it has enough resources to pay off debts and continue operations. Conversely, if liabilities surpass assets, the company may face financial difficulties. This assessment helps stakeholders, including investors and creditors, gauge the company's financial health and stability.