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The ability of an entity to pay its liabilities as they fall due, in the short, medium and longer term.


In law in the UK, the ability of a company - on a balance of probabilities - to meet all of its existing, prospective and contingent liabilities, taking account of future costs and of future interest obligations.

In making this assessment, future income and future asset valuations are also taken into account.

3. Pensions.

The extent to which the assets of a defined benefit pension scheme are sufficient to meet the liabilities and thus closely related to funding level.

Liabilities, and thus solvency, may be calculated on a discontinuance or a going concern basis for the scheme concerned.

See also