#Liquidity101 Liquidity

Liquidity refers to the ease with which an asset can be converted into cash without significantly affecting its price. For businesses, it measures their ability to meet short-term financial obligations, such as paying debts or bills, using their current assets. Highly liquid assets include cash or cash equivalents, while real estate or rare collectibles are generally less liquid as they require more time and effort to convert. A healthy level of liquidity indicates financial soundness and stability for an entity.