Difference between Solvency and Liquidity?

Answer

The difference between solvency and liquidity is that when a business is solvent, it has debts that it is unable to settle with its assets. i.e. even if it could sell all its assets, it would still be unable to repay its debts. On the other hand, liquidity is when a business is capable of covering current liabilities quickly with current assets; i.e, its assets are greater than its debts.
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