Solvency studies determine the ability of a company to pay back its debts with its available cash. It can also describe the company’s ability to perform long-term expansion and growth. This shouldn’t be confused with profitability which is a company’s ability to make a profit. Often a company cannot make a profit, yet does have enough cash to pay its debts. When a company is insolvent, then it can not pay back its lenders. When a company is insolvent, and unprofitable, it will become bankrupt. Solvency studies determine how solvent a company is.