solvency

Vocabulary Word

Definition

'Solvency' is financial lingo that essentially means a company can pay its debts. Think of it like having enough cash in your bank account to pay the bills and still have money left over.

Examples in Different Contexts

In nonprofit organizations, 'solvency' is crucial to sustain projects and maintain donor trust. A financial officer in a nonprofit might advise, 'Regular solvency assessments are essential to ensure the responsible management of funds and the continuity of our impact initiatives.'

Practice Scenarios

Economics

Scenario:

The nation's economic stability is under significant pressure. We must reconsider our public spending habits and liabilities.

Response:

The solvency of the nation is indeed at risk. Proactive fiscal policies can help steer us clear from a crisis.

Business

Scenario:

Given the current market conditions, we should be vigilant not to jeopardize our long-term financial health.

Response:

Given our reliable solvency ratio, we are well-placed to handle any unforeseen financial challenges.