#Liquidity101

Liquidity101 is a beginner’s guide to understanding liquidity in finance and business. Liquidity refers to how easily an asset can be bought or sold without affecting its price. Highly liquid assets, like cash or stocks, can be quickly converted to cash, while illiquid assets, like real estate or collectibles, take longer to sell. In markets, liquidity ensures smooth trading and stable prices. A liquid market has many buyers and sellers, reducing transaction costs and slippage. Businesses also measure liquidity to assess their ability to meet short-term obligations. Common metrics include the current ratio and quick ratio. Liquidity is essential for financial health.