The liquidity of a business firm refers to its ability to pay its short-term obligations as they come due.

Question

Quizplus · Accepted Answer

Liquidity is indeed the ability of a business firm to meet its short-term financial obligations, such as paying suppliers, salaries, and other expenses that are due in the near future. It is an important aspect of a company's financial health and stability. A high level of liquidity indicates that a firm has enough cash or assets that can quickly be converted into cash to meet its debt obligations, while a low level of liquidity may signal financial distress and the possibility of default.

The Liquidity of a Business Firm Refers to Its Ability