Why is liquidity important to finance?

Question

Why is liquidity important to finance?

Answer 1

Liqudity Finance is a progressive finance brokerage specialising in providing solutions for property investors.  Liquidity provide cash flow solutions for growing businesses in the West Midlands and beyond. These include sales, asset and trade finance also.  

Answer 2

If no one wants to buy it,(exchange cash for it readily) then you have something that is basically worthless.

Answer 3

Liquidity is the ability to convert assets to cash. It's important for a company to maintain a certain level of liquidity so that they can pay their expenses and debts when they become due. If you have a company that has all of their money tied up in non-liquid assets (PP&E), then it's not a good thing from a cash flow standpoint.

Also, companies have difficulty obtaining financing if they don't have the ability to pay their debts when due (poor quick ratio, ie acid test).

Answer 4

is this a homework question?