Liquidity

Home » CMA Glossary Term » Ratios and Performance Metrics » Liquidity

Liquidity, in accounting terms, refers to the ability of an entity to meet its short-term obligations using its most liquid assets. It measures how quickly assets can be converted into cash without significant loss of value. High liquidity indicates a strong capacity to cover liabilities, while low liquidity suggests potential financial strain. Understanding what is liquidity in accounting terms is crucial for assessing a company’s financial health and operational efficiency.

CMA Prep Course

CMA Exam Academy is a proven, 16-week per part online coaching program to help you pass the CMA. The Academy’s comprehensive curriculum will help you pass the CMA exam and achieve your dreams of earning 6-figures per year, ascend to the executive ranks and earn the respect from your peers.