Liquidity
How quickly and cheaply an asset can be turned into cash without losing value.
The word carries two related uses in this course. For a saver it ranks savings vehicles; on a balance sheet it orders the asset side, cash first and equipment last. Unit 3B also uses it for a business's ability to meet short-term obligations.
Often confused with
- Solvency
- Liquidity is about the short run and cash on hand; solvency is about meeting long-run obligations.
Taught in
See also
3.1.C.2 · 3.7.A.2.i