Which of the following reflects the definition of solvency?

Solvency refers to the ability of an individual or organization to meet its long-term financial obligations. This concept is crucial for assessing a company's financial health, particularly its capacity to sustain operations over time and manage its debts without risking bankruptcy. Analyzing solvency typically involves reviewing financial ratios, such as the debt-to-equity ratio or long-term debt to assets ratio, which provide insights into the level of debt a company holds in relation to its equity and total assets.

The other choices focus on different aspects of financial management. The ability to generate revenue pertains to a company's capacity to create sales and income, which is more related to its operational efficiency. On the other hand, the ability to cover short-term debts reflects liquidity, not solvency; it concerns whether a company can meet its immediate obligations. Lastly, maintaining cash flow is vital for day-to-day operations and short-term financial health, but it does not directly illustrate solvency, as it does not address long-term obligations.