The ease with which an asset can be converted into cash is referred to as its
A) liquidity.
B) profitability.
C) solvency.
D) convertibility.
E) capitalization capacity.

Question

Quizplus · Accepted Answer

Liquidity refers to the ability of an asset to be easily and quickly converted into cash without losing value. Higher liquidity assets are preferred as they provide ready cash for emergencies or investment opportunities. Profitability refers to the ability of an asset to generate returns. Solvency refers to the ability of an individual or organization to meet its financial obligations. Convertibility refers to the ability of a currency to be exchanged into another currency or asset. Capitalization capacity refers to the ability of an asset to raise capital.

The Ease with Which an Asset Can Be Converted into Cash