Solvency measures the ability of a business to:
A) repay its long-term debts at maturity and interest as it becomes due.
B) meet its short-term obligations.
C) pay its obligations that will fall due within the operating cycle.
D) turn its inventory into cash.

Question

Quizplus · Accepted Answer

Solvency is an entity's ability to pay interest as it becomes due and to repay the debt at maturity.

Solvency Measures the Ability of a Business To