How is liquidity measured?

Question

How is liquidity measured?

Answer 1

liquidity means the ability to have cash available when needed to meet financial obligation, to pay creditors on a timely basis.

this can be measured by getting its current ratio by dividing total current asset asset over the current liabilities.

also if you want to be more accurate with your computation, you can divide (cash+Accounts receivable)/Current liab.

Answer 2

there is a formula, if that's what you looking for,

CR = (cash equivalent + cash) / current liability

Answer 3

When you say "liquidity" im guessing by this you mean Viscosity which is the measure of how resistant a liquid is.

http://en.wikipedia.org/wiki/Viscosity

Liquids can also be measured in volume and also how much pressure they exert.

Answer 4

liquidity is measured in terms of cash and where that item is in the cycle.  Hence., cash is obviously the most liquid, checking accounts next, etc.  On the other side you would likely start with receivable financing, accounts payable, current portion of long term debt, long term debt, shareholder loans, shareholder equity.

Answer 5

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Answer 6

Indirectly.

If there is a shortage of something, the price goes up.  With money, the price is interest.  If there is a shortage of money in the economy, the easy way of saying lack of liquidity, interest rates go up.  The most sensative is the Fed funds rate, which is why the Federal Reserve Open Market Committee pays such close attention to it.

Answer 7

The speed at which an asset can be converted into cash at its fair value