Liquidity

Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price significantly. In financial markets, a highly liquid asset, like cash or publicly traded stocks, can be quickly converted into cash with minimal price fluctuation. On the other hand, illiquid assets, such as real estate or collectibles, may take longer to sell and may require significant price reductions to be sold quickly. In a business context, liquidity refers to a company's ability to meet its short-term obligations using its most liquid assets, like cash or assets that can be quickly converted into cash. Businesses with strong liquidity are in a better position to handle financial difficulties and take advantage of investment opportunities.