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What is Solvency ?

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Question added by Alanood Almingash , Treasury Accountant , Saudi Arabian Amiantit Co
Date Posted: 2015/11/03
Aqeel Shafique
by Aqeel Shafique , ACCOUNTANT , Sharp lion Technical services

The ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business, but a company also needs liquidity to thrive. Liquidity is a company's ability to meet its short-term obligations. A company that is insolvent must enter bankruptcy; a company that lacks liquidity can also be forced to enter bankruptcy even if it is solvent.

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