Liquidity refers to the ease and speed with which an asset can be converted into cash without significant loss of value.
A liquid asset is one that can be quickly sold in the market without difficulty, such as cash or investments easily convertible into cash.
Liquidity is important both on a personal and business level, as it allows for handling unexpected expenses, covering debts, or seizing investment opportunities. Maintaining an adequate level of liquidity is essential to ensure financial stability.
