GlossarySolvency

What means Solvency?

The extent to which a company, financial institution or individual can meet all its financial obligations. A high solvency not only means that a huge financial buffer can be absorbed against future setbacks, but it also means that acquisitions can be made without issuing shares. The solvency ratio is calculated by dividing the assets by the total balance sheet (total liabilities) and then multiplying by 100%.