The short-term solvency position of company indicates the ability of the company to meet its short-term abilities like payment to creditors, payment of wages & salaries etc.
Short term solvency position is studied by taking into consideration current ratio accompanied by liquid ratio.
Long-term solvency position of a company indicates the ability to meet its long-term liabilities like redemption of debentures, payment of long term loans etc.
Long-term solvency position is indicated by the proprietary ratio & debt equity ratio.
As a shareholder/debenture holder one will be concerned about the long-term solvency position of the company this is because the shareholders/debenture holders invest their money in long-term funds.
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