Solvency, is an indicator that is applied on financial statements, it is a relationship between the total assets "Assets (accounting)") of an entity (natural or legal person) and the total liabilities "Liabilities (accounting)"). This ratio is a quotient that indicates how many resources are active compared to liabilities.

It makes up part of the long-term equity or financial analysis of the entity issuing the financial statements.

Total assets = €45,000.

Total liabilities = €15,000.

Total Assets / Total Liabilities = 3.

The relationship is interpreted as follows: for every euro of liabilities, the entity has three euros of assets to meet it.