#Liquidity101 #Liquidity101 – A Beginner’s Guide to Understanding Liquidity

Liquidity is a fundamental concept in finance, and understanding it is key whether you're managing a business, trading stocks, or just looking after your personal finances. Here's a simple breakdown:

🔍 What is Liquidity?

Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price.

High liquidity = Easy to buy/sell quickly (e.g., cash, publicly traded stocks)

Low liquidity = Harder to buy/sell quickly or at full value (e.g., real estate, rare collectibles)

🏦 Types of Liquidity

Market Liquidity: How easily assets can be bought or sold in a market.

Example: The stock market generally has high liquidity.

Accounting (or Balance Sheet) Liquidity: A company’s ability to meet