Liquidity

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Revision as of 20:44, 23 July 2016 by imported>Doug Williamson (Expand.)
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1.

An asset's ability to be turned into cash quickly and without significant loss compared with current market value.


2.

An entity’s ability to pay its obligations when they fall due, especially in the short term.


3.

An entity's ability to source additional funds to meet its obligations, including in the medium and longer term.


4.

A financial measure designed to measure 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 organisations, liquidity measures include those which measure how long the bank could survive if wholesale funds were to dry up and retail funding was heavily stressed.


See also


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