#Liquidity101

Liquidity refers to a company's ability to convert assets into cash quickly and efficiently to meet its short-term obligations or liabilities. Think of it like having enough cash on hand to pay bills or debts when they're due. There are different types of liquidity, including.

- Market Liquidity: How easily an asset can be sold without affecting its price

- Accounting Liquidity A company's ability to meet its cash obligations

- Liquid Capital: The amount of money a firm has available

To measure liquidity, businesses use ratios like the acid test ratio, current ratio and cash ratio. Maintaining healthy liquidity is crucial for growth and financial stability .