Liquidity: Difference between revisions
imported>Doug Williamson (Add link.) |
imported>Doug Williamson (Add headings.) |
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1. | 1. ''Assets.'' | ||
An asset's ability to be turned into cash quickly and without significant loss compared with current market value. | An asset's ability to be turned into cash quickly and without significant loss compared with current market value. | ||
2. | 2. ''Markets.'' | ||
In relation to a market, the extent to which large quantities of the asset traded in the market can be bought or sold at any time, with low transaction costs, and without affecting the market price. | In relation to a market, the extent to which large quantities of the asset traded in the market can be bought or sold at any time, with low transaction costs, and without affecting the market price. | ||
3. | 3. ''Entity's short-term financial health.'' | ||
An entity’s ability to pay its obligations when they fall due, especially in the short term. | An entity’s ability to pay its obligations when they fall due, especially in the short term. | ||
4. | 4. ''Entity's medium-term financial health.'' | ||
An entity's ability to source additional funds to meet its obligations, including in the medium and longer term. | An entity's ability to source additional funds to meet its obligations, including in the medium and longer term. | ||
5. | 5. ''Financial measures.'' | ||
A financial measure designed to quantify an entity's ability to meet its obligations when they fall due. | A financial measure designed to quantify an entity's ability to meet its obligations when they fall due. | ||
Revision as of 00:49, 18 March 2021
1. Assets.
An asset's ability to be turned into cash quickly and without significant loss compared with current market value.
2. Markets.
In relation to a market, the extent to which large quantities of the asset traded in the market can be bought or sold at any time, with low transaction costs, and without affecting the market price.
3. Entity's short-term financial health.
An entity’s ability to pay its obligations when they fall due, especially in the short term.
4. Entity's medium-term financial health.
An entity's ability to source additional funds to meet its obligations, including in the medium and longer term.
5. Financial measures.
A financial measure designed to quantify an entity's ability to meet its obligations when they fall due.
- For non-financial organisations, simple measures of liquidity include the current ratio and the quick ratio.
- For banks and other financial institutions, liquidity measures include those which identify how long the bank could survive if wholesale funds were to dry up and retail funding was heavily stressed. This period is known as the survival period.
See also
- Authorisation
- Authority limits
- Cash and cash equivalents
- Cash forecasting
- Cash pool
- CertICM
- CRD IV
- Current ratio
- Deep market
- Funding
- Funds
- Headroom target
- Illiquid
- Insolvency
- Leverage
- Liquid
- Liquidate
- Liquidation
- Liquidity buffer
- Liquidity Coverage Ratio
- Liquidity preference
- Liquidity management
- Liquidity premium
- Liquidity risk
- Money management
- Net Stable Funding Ratio
- Quick ratio
- Run
- Security
- Solvency
- Stress
- Supply chain finance
- Survival period
- Yield
