Definition

The amount of cash or assets that can quickly be turned into cash, which is important for meeting short-term financial obligations.

Example

The company improved its liquidity by selling some of its assets.

Conversation

Have you heard about the importance of liquidity in investing?

Yeah, it’s crucial for making quick decisions, right?

Exactly! If you have high liquidity, you can jump on opportunities easily.

For sure, it really helps you stay flexible with your finances.

Synonyms & Antonyms

Root Explanation

Liquidity → It is formed from "liquidus" (from Latin, meaning fluid or flowing) and the suffix "-ity" (meaning the state or condition of). The word "liquidity" refers to the state of being liquid or the ease with which assets can be converted into cash.

Memory Tip

Think of the word 'liquid' which means something that flows easily, and remember that 'liquidity' describes the state of being able to convert assets into cash easily.

Visually Confused Words