Liquidity is the ability of a company to convert its assets i.e stock, bonds, short term deposits, into cash within a short period to meet its liabilities. It is a good practice to keep a check on liquidity. A company with high liquidity gives more confidence to the investors.
Let’s take a case where ABC company is going through a tough phase in the business cycle. If the business has low liquidity, it may find it difficult to sell its assets at its true value. It is important to track liquidity to take careful management decisions.
Related Articles
Concentrated Liquidity
First introduced by Uniswap v3, concentrated liquidity aims to boost capital efficiency, and to make up for the inadequacy of the original x*y = k formula underlying the standard automated market maker model. Within the new model, liquidity can be ...
Corporate Treasury
Corporate treasuries are in charge of a company's cash reserves. They serve as financial risk managers who seek to protect a company's value from the risks it faces regularly due to the nature of its business. Additionally, treasurers manage company ...
Dead Coin
Dead coins are digital tokens that have failed or been revelaed as scams, and thus, no longer viable. There are thousands of failed cryptocurrency projects or ICOs that are no longer active for a number of reasons ranging from internal corruption ...
Cross-Border Trading
“Cross-border trading grants the opportunity to trade in international markets against local counterparties and currencies, which presents unique trading opportunities. Investors engaged in cross-border trading can benefit from access to global ...
ERC-20
ERC-20 tokens are based on the Ethereum Blockchain. Just like mainstream cryptocurrencies such as Bitcoin, they can be used to make purchases — or traded for fiat currencies and crypto. These assets, which usually have a fixed supply, can be stored ...