Answer:
The answer is A. when its liabilities exceed its assets.
Explanation:
Insolvency is the state of not being able to pay its long-term debt or liability. If a liability exceeds assets, the company is at the risk of liquidation, it becomes a going concern issue. And meeting its short term obligation (liquidity) or long-term obligation (solvency) is in doubt.
One of the ratio to determine insolvency is debt-to-equity ratio.
