hi im vinuta, i want to know the meaning of liquidity? i
know that it means converting the assets into cash, but i
want to know something more than that, so kindly help me?
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Answer Posted / balaji
hi vinuta, this is balaji. as you told liquidity is the
convertibility of fixed assets into cash. if all funds are
locked up in fixed assets, company will not be able to meet
its day to day transactions. so some funds should be liquid.
as we know american banks are facing liquidity crisis
because they aquired homes for which they had given loans
because of default in re payment. now they are not able to
sell those houses and convert it into cash.
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