Accounting for IGCSE & O level - Final Statements (Section 14 - No. 50)

What does the term "liquidity" refer to in business?

The ability of a business to generate profits.

The ability of a business to convert assets into cash quickly.

The total amount of debt a business has.

The amount of capital invested in a business.

Liquidity is a measure of how quickly and easily a company can convert its assets into cash to pay off short-term obligations.