Final answer:
Liquidity refers to how quickly you can use a financial asset to buy a good or service. Cash is very liquid, while other forms of money may be less liquid.
Step-by-step explanation:
Liquidity refers to how quickly you can use a financial asset to buy a good or service. It is a measure of how easily one can exchange money or financial assets. Cash is considered very liquid as it can be readily used to buy things, while other forms of money, like money in a savings account, are less liquid because they require additional steps to access and use.
Liquidity refers to a company's ability to collect enough short-term assets to pay short-term liabilities as they come due. A business must be able to sell a product or service and collect cash fast enough to finance company operations.