En accounting terms and economics, liquidity is understood to be the ability of an investment to be transformed into cash without causing a significant loss in value. In other words, the easier it is to convert an asset into cash, the more liquid it is said to be.
To measure the liquidity of a company, what is known as the liquidity ratio is used, which allows calculating the capacity of a company to meet its short-term obligations and, with this, find out its solvency in cash and its ability to resolve profitably any unforeseen.
It is important to control the liquidity of a company, especially during those times when bank credit is low. Thanks to the different formulas provided by the financial analysis of companies, it is possible to calculate the degree of liquidity of a company, which must always have a certain relationship with its amount of short-term debt.
Calculate the liquidity ratio