Liquidity / Money Supply - Financial Accounting

by Geethalakshmi 2009-11-24 18:48:43

What is Liquidity in Financial Accounting?


In general Liquidity is defined as the "Measure of the extent to which a person or firm has cash to meet immediate and short-term obligations".

In terms of Accounting it is defined as the "Ability of current assets to meet current liabilities".

In terms of Investment it is defines as the "Ability to quickly convert an investment portfolio to cash with little or no loss in value".

Liquidity is also know as "Money Supply".

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