INSOLVENT Meaning and
Definition
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Insolvent is an adjective that describes a person, organization, or entity that is unable to pay its debts or obligations as they become due. It signifies a state of financial distress where the total liabilities exceed the total assets, rendering the individual or entity incapable of meeting its financial obligations. When an individual is declared insolvent, they may be required to file for bankruptcy and undergo a formal legal process to resolve their financial difficulties.
In the context of an organization or company, insolvency often leads to liquidation or winding up, where its assets are sold to repay or settle outstanding debts. Insolvency can be a result of various factors such as excessive debt, poor financial management, economic downturns, or other unforeseen events that negatively impact the ability to generate sufficient income.
Identifying insolvency can be determined by analyzing financial statements such as balance sheets, income statements, and cash flow statements. These documents provide a snapshot of an entity's financial health and can reveal indicators of insolvency, such as negative equity or a declining ability to cover short-term debts.
Overall, the term "insolvent" denotes a severe financial condition in which an individual, organization, or entity is unable to meet its financial obligations and has insufficient assets to cover its debts.
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• A debtor unable to pay his debts.
• Unable to pay debts; in pecuniary difficulties.
Etymological and pronouncing dictionary of the English language. By Stormonth, James, Phelp, P. H. Published 1874.
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Etymology of INSOLVENT
The word "insolvent" has its origins in Latin. It derives from the word "in" meaning "not", and "solvēre" meaning "to loosen, release, or pay". In Latin, "in" is a negative prefix, and "solvēre" is a verb meaning "to release from a debt" or "to pay". Over time, "in" and "solvēre" were combined to form the Latin word "insolvēre", which translates to "unable to pay" or "bankrupt". This Latin term eventually passed into Old French as "insolvent", retaining a similar meaning. The term then made its way into Middle English, where it eventually became the word "insolvent" that we know today.
Similar spelling words for INSOLVENT
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