3 tests to analyze solvency

Description

Abstract: Solvency is generally defined as a business’s or individual’s ability, at a specific point in time, to meet its long-term interest and repayment obligations. A company’s solvency may come into play in fraudulent conveyance, bankruptcy alter ego and due diligence actions. This article highlights the three tests that experts apply when preparing a solvency opinion. All three of these tests must be passed for a company (or debtor) to be considered solvent.