Long-term solvency

Long-term solvency is the ability to sustain financing and meet longer-term obligations. Consider the scale of long-term borrowing, its repayment schedule, interest cover and the business's ability to generate cash. A profitable company can still face difficulty refinancing a large debt when it matures, so a balance-sheet ratio is only part of the assessment. Assess both the size of obligations and whether future financing and cash generation can support them. Refinance risk depends on the available terms at maturity.