#Liquidity101

💧 | Why It Matters in Crypto & Finance

🔍 What Is Liquidity?

Liquidity = How fast you can convert assets to cash without hurting the price.

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🚨 Why Liquidity Matters:

✅ Pay off short-term debts

✅ Handle emergencies

✅ Seize market opportunities

✅ Avoid financial stress

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📊 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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📏 Key Liquidity Ratios:

1. Current Ratio = Assets / Liabilities

2. Quick Ratio = (Assets – Inventory) / Liabilities

3. Cash Ratio = Cash / Liabilities

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💡 Pro Tip: High liquidity = financial flexibility.

It’s crucial in both traditional finance and crypto trading.