11. Degree of solvency refers to ________. A. a company\'s ability to refinance

Question

11. Degree of solvency refers to ________. A. a company's ability to refinance long-term debt as it becomes due B. a company's ability to meet long-term obligations as they become due C. a company's ability to quickly convert long-term assets into current assets D. a company's ability to quickly convert current assets into cash 11. Degree of solvency refers to ________. A. a company's ability to refinance long-term debt as it becomes due B. a company's ability to meet long-term obligations as they become due C. a company's ability to quickly convert long-term assets into current assets D. a company's ability to quickly convert current assets into cash

Explanation / Answer

In business and finance, solvency is a business’ or individual’s ability to meet their long-term fixed expenses. A solvent company is one whose current assets exceed its current liabilities.

If a company is solvent it is able to accomplish long-term expansion and growth, as well as meeting its long-term financial obligations.

A solvent company is able to pay its obligations when they come due and can continue in business.

Hence degree of solvency refers to a company's ability to meet long-term obligations as they become due

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