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