Financial solvency refers to the ability of an entity to:
A) meet its long-term obligations.
B) earn a high rate of profit.
C) improve sales.
D) Both A and B.

Question

Quizplus · Accepted Answer

Financial solvency specifically pertains to an entity's ability to meet its long-term obligations, regardless of whether it is earning a high rate of profit or improving sales. While these factors may impact a company's overall financial health, they do not necessarily indicate its solvency.

Financial Solvency Refers to the Ability of an Entity To