The correct answer is: A. Solvency.
Solvency is the ability of a company to meet its long-term financial obligations. A company is considered solvent if it has enough assets to cover its liabilities. Solvency is important because it indicates that a company is able to pay its bills and continue operating.
Leverage is the use of debt to finance assets. A company with high leverage is said to be highly leveraged. Leverage can increase a company’s return on equity, but it also increases the risk of financial distress.
Insolvency is the inability of a company to meet its financial obligations. A company is considered insolvent if it cannot pay its bills when they are due. Insolvency can lead to bankruptcy.
Liquidity is the ability of a company to convert its assets into cash quickly. A company with high liquidity is said to be highly liquid. Liquidity is important because it allows a company to meet its short-term financial obligations.