Which statement about liquidity and solvency is accurate?

• A. Liquidity is the ability to meet long-term obligations; solvency is the ability to meet short-term obligations.
• B. Liquidity measures total assets and liabilities; solvency measures cash flow.
• C. Liquidity is the measure of profitability; solvency is the measure of debt load.
• D. Liquidity is the ability to meet short-term obligations; solvency is the ability to meet long-term obligations.

Answer: (D)