#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, art, or equipment are less liquid due to time and effort required to sell. In finance, liquidity is crucial—it ensures businesses can meet short-term obligations and investors can exit positions when needed. Market liquidity describes how actively assets are traded, while accounting liquidity measures a company’s ability to pay off current liabilities. Good liquidity management helps avoid financial stress. Always know your liquidity position before making major financial or investment decisions.