Solvency

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Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity.[1] Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth.[2] This is best measured using the net liquid balance (NLB) formula. In this formula solvency is calculated by adding cash and cash equivalents to short-term investments, then subtracting notes payable.[3]

See also

Notes

  1. Zietlow 2007, p. 5
  2. Gaist 2009, p. 34
  3. Zietlow 2007, p. 30

References

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External links

  • The dictionary definition of solvency at Wiktionary