{"id":271842,"date":"2023-12-20T11:44:34","date_gmt":"2023-12-19T23:44:34","guid":{"rendered":"https:\/\/www.reckon.com\/nz\/?page_id=271842"},"modified":"2025-01-31T12:26:24","modified_gmt":"2025-01-31T00:26:24","slug":"liquidity","status":"publish","type":"glo","link":"https:\/\/www.reckon.com\/nz\/glossary\/liquidity\/","title":{"rendered":"What is liquidity?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description ” _builder_version=”4.27.4″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n

Liquidity is a key concept in business finance. It refers to the stability of the price of an asset and how easily it can be traded without dropping in value.<\/p>\n

As a business owner, it\u2019s crucial you understand what liquidity is and how it works. So, what exactly is liquidity?<\/p>\n

Liquidity definition<\/h2>\n

The term liquidity refers to the ease and speed with which an asset can be bought or sold without causing a significant change in its price.<\/p>\n

Highly liquid assets can be traded easily on the open market, while less liquid assets will typically be in low demand and have fewer buyers and sellers, making transactions more challenging.<\/p>\n

What are liquid assets?<\/h2>\n

A liquid asset is an asset that can be quickly and easily converted into cash (through buying or selling) without a noteworthy loss of value.<\/p>\n

The most liquid asset is usually cash itself<\/a> and liquidity is often used as a shorthand term for cash.<\/p>\n

Most liquid assets are highly tradable in the market and include items such as:<\/p>\n