Understanding Company Finances: Liquidity, Solvency, and Debt
Liquidity
Liquidity is the ease with which an asset can be converted into cash without significant loss of value. It represents the ability of a company to meet its short-term payment obligations to suppliers, workers, banks, etc. A company has liquidity if it can meet all its short-term payment obligations.
When a company lacks liquidity, it previously was said to be in default. Now, it enters into an arrangement with creditors. This situation is overseen by a judge. A group of experts, appointed
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