What does solvency indicate about a business?

Solvency is a critical financial metric that reflects a business's ability to meet its long-term financial obligations. It specifically measures whether a company has enough assets to cover all its liabilities, thus indicating financial health. When a business is solvent, it shows that it can not only cover its short-term debts but also sustain its operations in the long term by fulfilling obligations that may be due further down the line.

Understanding solvency is essential for stakeholders, such as investors and creditors, as it provides insights into the overall risk associated with the business. For example, a solvent company is better positioned to weather economic downturns or unexpected financial challenges, which is why this concept is fundamental in assessing a company's viability.

The other options address different aspects of financial health but do not directly align with the definition of solvency. Management of cash flow pertains more to liquidity, which is about short-term financial health rather than long-term obligations. Market share growth potential and profitability margins relate to a company's performance metrics and strategic positioning, which do not specifically reflect its ability to meet debts and financial commitments.