Liquidity

Formal

Cash is a liquid asset - and liquidity is a term that relates to the ability of all assets to be transformed into cash or cash equivalents at short notice. Used as a measure on businesses to assess their ability to pay their debts as they fall due for payment.

Straight Talk

Cash ‘flows’, ‘moves’, ‘peaks’, ‘bubbles’, ‘drains’. It ‘oils’ businesses and helps them run smoothly. The association of terms of fluidity to cash is age-old. So, liquidity is how much cash is spare, available, or otherwise quickly obtainable. High liquidity is a good sign that there is likely to be enough cash to achieve plans.