For me liquidity is profitability ,is it right?

Question

For me liquidity is profitability ,is it right?

Answer 1

Liquidity is accessibility... You can get to your investment and "cash out" virtually instantly with the most liquid investments. A good example of a high liquidity investment would be a money market fund or an interest bearing checking account. Traditionally, these vehicles don't have a high rate of return. The most liquid financial asset is cash.

An exception to this rule of thumb would be precious metals like gold, platinum, etc. You can exchange these assets for cash at any time through a dealer, but the price changes by the minute so there is risk.

The same is true of stocks and mutual funds which are fairly liquid, but you can't just take them to a store and spend them like cash either. You need to trade these securities through a licensed broker so they are less liquid than money market funds.

Certificates of deposit with a fixed term like 1 year or 3 years are NOT liquid. Your rate of return if guaranteed, but you have exposure to the forces in the marketplace like inflation.

Lastly, liquidity is not equivalent with profitability. Some investment vehicles are both highly liquid and very risky like trading commodities or currency on the FOREX. You may make a lot of money or lose a lot of money very quickly.

Answer 2

Sometimes, but you can have liquidity without profitability and profitability without liquidity.  Liquidity merely means that your cash income is more than your outlays.  Profit is the difference between revenue and expense.

Answer 3

Your are absolutely wrong.

Liquidity does not mean profitability.

Liquidity means as how much money you have i e ready to flow i e ready to pay or make some expenses/purchases.

Answer 4

Liquidity is not profitability. It may lead to profitability, but it isn't profitability in itself.

Liquidity means that you have sufficient amount of cash to pay financial obligations.  

Answer 5

yes