Which of the following best defines 'solvency' in a financial context?

Solvency in a financial context refers to a company's ability to meet its long-term financial obligations. It assesses whether an organization has sufficient assets to cover its long-term liabilities, meaning that if all debts were to come due at once, the company could still fulfill these obligations without experiencing financial distress. This concept is crucial for evaluating a business's long-term viability and financial health, as it reflects its capability to survive and grow over time.

The other choices focus on different aspects of financial health. While the ability to pay current liabilities relates to liquidity, which is a measure of short-term financial health, sustaining ongoing operational expenses pertains to operational efficiency and cash flow management rather than solvency itself. Lastly, avoiding bankruptcy risks is more about overall risk management rather than a direct measure of solvency. Therefore, the definition of solvency is accurately captured by the idea of meeting long-term financial obligations.