Economic foundations in business enviornment?

Question

"Liquidity management will assume priority in the conduct of monetary policy through appropriate and timely action"-Comment

Answer 1

Early on, most businesses live on loans and credit and stocks and bonds. The measurement of your liquidity assets is comprised mostly of checking and savings accounts- cash you can get your hands right away.

As the business matures, it (hopefully) accumulates liquid assets. Assets above and beyond what the monthly expenses are. This money can be used to invest in the business (new plant, modernization, upgrades) in order to produce more products than before, hence more profits and cash.

Larger businesses with a great deal of extra cash have to decide what to do with it. Invest it? Bonds? Plant improvements? New technology and new workers to carry it out? The optimum solution is to spend what you must to increase productivity/product and place the rest in an interest-bearing account. Financial experts figure what to do, when to buy and  sell, what and how much. The market changes fast!