insolvent

Vocabulary Word

Definition

Insolvent is a term used when an individual or business cannot fulfill financial obligations - meaning they can't pay back their debts. It's like having a negative balance which you can’t cover.

Examples in Different Contexts

In business management, avoiding an 'insolvent' state is crucial to sustain operations. A CEO might advise, 'Maintaining ample liquidity and prudent financial management is paramount to avoid becoming insolvent and ensuring the company's longevity and success.'

Practice Scenarios

Business

Scenario:

Our company's financial situation is precarious. Without a successful rollout of our new product, we face severe consequences.

Response:

Financial stability is crucial. The risk of becoming insolvent is too high; we need a confident investor.

Impact

Scenario:

The donation drive was not as successful as we'd hoped. We need to find another means to sustain operations.

Response:

To avoid becoming insolvent, perhaps we can collaborate with other non-profits for a joint fundraising campaign.