The term “liquidity” describes how quickly and easily security or asset can be turned into cash without depreciating in value. The most liquid asset is cash, while the least liquid asset is tangible goods. Market liquidity and accounting liquidity are the two primary types of liquidity.
The most popular methods for assessing liquidity are current, quick, and cash ratios.
Properties or assets that are difficult to trade for cash are not considered to be liquid assets, but those that may be exchanged immediately are.
Market and accounting liquidity are the two basic categories of liquidity. Liquidity is typically assessed using current, quick, and cash ratios. Properties or assets that are difficult to exchange for cash are considered to be non-liquid, whereas those that can be traded immediately are classed as liquid assets.
