Choose the correct definition for solvency.
A)The ability of the business to pay debts as they fall due for payment
B)The ability of the business to continue to operate profitably
C)The ability of the business to borrow further funds if needed
D)The ability of the business to attract new customers when needed

Question

Quizplus · Accepted Answer

Solvency refers to the ability of a business to pay its debts as they fall due for payment. This is an important indicator of a company's financial health as it shows whether it has enough current assets to cover its current liabilities.

Choose the Correct Definition for Solvency