Solvency

This article is about financial solvency. For the policy debate term, see Solvency (policy debate).

Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity.^[1] Solvency can also be described as the ability of a corporation to meet its long-term fixed expenses and to accomplish long-term expansion and growth.^[2] This is best measured using the net liquid balance (NLB) formula. In this formula, solvency is calculated by adding cash and cash equivalents to short-term investments, then subtracting notes payable.^[3] There exist cryptographic schemes for both proofs of liabilities and assets, especially in the blockchain space.^[4][5][6]

See also

• Accounting liquidity
• Debt ratio
• Going concern
• Insolvency
• Quick ratio

Notes

1. Zietlow & Seidner 2007, p. 5
2. Gaist 2009, p. 34
3. Zietlow & Seidner 2007, p. 30
4. Ji & Konstantinos 2021
5. Chalkias et al. 2020
6. Dagher et al. 2015

References

• Gaist, Paul A (2009). Igniting the Power of Community: The Role of CBOs and NGOs in Global Public Health. Springer. ISBN 978-0-387-98156-7. OCLC 310400989.
• Zietlow, John T; Seidner, Alan G (2007). Cash & investment management for nonprofit organizations. John Wiley and Sons. ISBN 978-0-471-74165-7. OCLC 255472451.
• Ji, Yan; Konstantinos, Chalkias (2021). "Generalized Proof of Liabilities". Computer and Communications Security (CCS). ACM.
• Chalkias, Konstantinos; Lewi, Kevin; Mohassel, Payman; Nikolaenko, Valeria (2020). "Distributed Auditing Proofs of Liabilities". Zkproof.
• Dagher, Gaby G.; Bunz, Benedikt; Bonneau, Joseph; Clark, Jeremy; Boneh, Dan (2015). "Provisions: Privacy-preserving Proofs of Solvency for Bitcoin Exchanges". Computer and Communications Security (CCS). ACM.

External links

•   The dictionary definition of solvency at Wiktionary