The ability of an individual or organization to meet long-term financial obligations and continue operations. A solvent entity has assets that exceed liabilities and sufficient cash flow to service debts.
From Latin 'solvere' meaning 'to loosen' or 'to pay,' the same root as 'solve.' The concept evolved because being solvent means you can 'loosen' or resolve your financial obligations, while insolvency means being unable to 'solve' your debt problems.
Solvency is about long-term financial survival - it's the difference between having a bad month and going out of business! While liquidity is about paying bills this week, solvency is about whether you'll still exist next year, which is why banks care more about your solvency ratios than your checking account balance.
Complete word intelligence in one call. Free tier — 50 lookups/day.