A company's ability to pay its long-term debts and obligations over time. A solvent company has enough assets and earning power to meet its financial commitments. Solvency is different from liquidity, which is the ability to pay short-term obligations with cash on hand.
A real estate company owes $10 million in long-term loans due over the next 20 years. Its total assets are worth $50 million and it generates $2 million in annual profit. The company is solvent because its assets and steady profits allow it to meet loan payments over time, even though it might not have $10 million in cash right now.
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