#Liquidity101 Liquidity101 liquidity refers to the ability of an asset to be converted into cash without losing value. In other words, it measures the ease and speed with which an asset can be sold or exchanged for another without affecting its price.

In the financial context, liquidity is crucial for:

Meeting short-term obligations:

A company with high liquidity can pay its debts and salaries on time, while a company with low liquidity may have trouble meeting these obligations.

Taking advantage of investment opportunities:

An investor with liquidity can quickly seize market opportunities without having to wait for an asset to be sold.

Assessment of financial health:

Liquidity is an important indicator of a company's financial health, indicating whether it is in a position to meet its obligations and take advantage of opportunities.