GENERAL KNOWLEDGE

Detailed explanation-1: -A life insurance provider with a high solvency ratio is more likely to be financially stable and therefore, more equipped to pay out your insurance claims and survive for a long time. Hence, an insurer’s solvency ratio is a direct indication of its ability to pay out claims.

Detailed explanation-2: -Key Takeaways. Solvency is the ability of a company to meet its long-term debts and other financial obligations. Solvency is one measure of a company’s financial health, since it demonstrates a company’s ability to manage operations into the foreseeable future. Investors can use ratios to analyze a company’s solvency.

Detailed explanation-3: -Solvency refers to an enterprise’s capacity to meet its long-term financial commitments. Liquidity refers to an enterprise’s ability to pay short-term obligations-the term also refers to a company’s capability to sell assets quickly to raise cash.