#Liquidity101
What is meant by financial liquidity?
Financial liquidity refers to the availability of cash for a company or individual, or the ease and speed of converting financial assets into cash available for immediate use, without incurring substantial losses in their value; that is, the level of financial liquidity is determined by the amount of cash currently available, in addition to financial assets that can be easily converted into cash within a short period.
Financial assets are items of financial value that can be easily traded, such as: cash, stocks, bonds, and bank deposits. Although these assets are not considered to have intrinsic material value, like land and buildings, their value depends on the level of demand for them in the market; for example, the value of stocks may rise and may also fall significantly depending on market conditions.