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Liquidity

Liquidity

Definition

A measurement of an organization's ability to meet its debt obligations, particularly short-term debt. Cash, accounts receivable, and short-term securities are considered liquid assets since they can be quickly made available to pay debt. Ratios commonly used to measure liquidity include the current ratio, acid-test ratio, number of days' sales in accounts receivable, accounts receivable turnover, total assets turnover, and inventory turnover.

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