#Liquidity101
๐ง | Why It Matters in Crypto & Finance
๐ What Is Liquidity?
Liquidity = How fast you can convert assets to cash without hurting the price.
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๐จ Why Liquidity Matters:
โ Pay off short-term debts
โ Handle emergencies
โ Seize market opportunities
โ Avoid financial stress
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๐ Types of Liquidity:
Market Liquidity: Can you trade quickly without big price swings?
Accounting Liquidity: Can a business cover its short-term dues?
Financial Liquidity: How cash-ready are your assets?
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๐ Key Liquidity Ratios:
1. Current Ratio = Assets / Liabilities
2. Quick Ratio = (Assets โ Inventory) / Liabilities
3. Cash Ratio = Cash / Liabilities
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๐ก Pro Tip: High liquidity = financial flexibility.
Itโs crucial in both traditional finance and crypto trading.
