Solvency

Solvency is the ability to meet long-term obligations and remain financially stable.

Solvency focuses on capital structure and long-term sustainability and is commonly assessed through leverage ratios and interest coverage.

- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.

- Example: Finance teams use **Solvency** when planning funding needs and managing cash and risk.

- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.