#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 things like real estate or collectibles are less liquid because they take time to sell. In business, liquidity is crucial because it ensures a company can meet short-term obligations, like paying suppliers or employees. Key measures of liquidity include the **current ratio** and **quick ratio**, which compare assets to liabilities. Good liquidity management helps businesses stay solvent and avoid financial stress. For individuals, having liquid assets means you can respond quickly to emergencies or opportunities. In short, liquidity keeps both personal and business finances flexible, stable, and ready for the unexpected.