#Liquidity101
🔹 Types of Liquidity
1. Market Liquidity
How easy it is to buy/sell assets (e.g., stocks, real estate) in the market.
High liquidity = many buyers and sellers (e.g., stocks).
Low liquidity = hard to sell quickly without discounting (e.g., rare collectibles).
2. Accounting (or Business) Liquidity
A company’s ability to meet short-term obligations using its liquid assets.
Key ratios:
Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (Current Assets - Inventory) / Current Liabilities