#Liquidity101

Liquidity is the ability of an individual or company to quickly convert assets into cash without a significant loss in value. In other words, the easier it is to sell an asset for cash, the higher its liquidity.

Cash is the most liquid asset, while assets like real estate or machinery are considered less liquid as they require time and effort to sell. In the business world, liquidity is important to ensure that a company can meet its financial obligations in a timely manner.

Liquidity is often measured through financial ratios such as the current ratio and the quick ratio, which provide an indication of a company's ability to cover its short-term obligations.

Maintaining a good level of liquidity is fundamental for financial stability, both for individuals and businesses.

Tip: Don’t focus solely on profit, but make sure you have enough liquidity to cover emergency situations.