#Liquidity101

Liquidity 101 (100-Word Note):

Liquidity refers to how quickly and easily an asset can be converted into cash without affecting its market price. Cash is the most liquid asset, while real estate or collectibles are less liquid. High liquidity allows individuals and businesses to meet short-term obligations smoothly. In financial markets, liquidity ensures stable prices and efficient trading. A lack of liquidity can lead to price volatility and financial stress. Key measures of liquidity include the current ratio, quick ratio, and cash ratio. Maintaining adequate liquidity is essential for financial health, especially during economic uncertainty or emergencies when access to cash is critical.