Which term refers to a business's ability to meet short-term obligations?

The term that refers to a business's ability to meet short-term obligations is liquidity. Liquidity is a measure of how easily a company's assets can be converted into cash to cover its current liabilities, such as accounts payable, short-term loans, and other debts that are due within a year. High liquidity indicates that a company can quickly respond to financial obligations, which is vital for maintaining operations and avoiding insolvency.

In contrast, leverage relates to the use of borrowed funds to amplify potential returns, solvency refers to a company's ability to meet long-term obligations, and profitability assesses a company's ability to generate income relative to its expenses and other costs. Thus, each of these concepts serves a different purpose in evaluating the financial health of a business, but liquidity specifically addresses short-term financial stability.