#Liquidity101 #Liquidity101

Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price. Cash is the most liquid asset, while real estate or collectibles are less liquid due to time and effort needed to sell. In financial markets, liquidity is vital—it ensures smooth trading and fair pricing. For businesses, high liquidity means they can meet short-term obligations easily. Common liquidity metrics include the current ratio and quick ratio. Investors and companies monitor liquidity to manage risk, maintain flexibility, and avoid financial distress. In short: more liquidity equals more financial freedom and stability.