The ability to generate future revenues and meet long-term obligations is referred to as:
A) Liquidity and efficiency.
B) Profitability.
C) Solvency.
D) Market prospects.
E) Creditworthiness.

Question

Quizplus · Accepted Answer

Solvency refers to a company's ability to meet its long-term obligations and generate future revenues. It is different from liquidity, which refers to a company's ability to meet short-term obligations, and profitability, which is a measure of a company's earnings relative to its expenses. Market prospects and creditworthiness are also important factors for a company's success, but they are not synonymous with solvency.

The Ability to Generate Future Revenues and Meet Long-Term Obligations