VocabularyBasePractice words

Meaning & use

liquidity

noun·Academic

Last updated

UK/lɪˈkwɪdəti/
US/lɪˈkwɪdəti/

Meanings

  1. noununcountablebusinessfinance

    The ease with which an asset can be bought or sold quickly without changing its price much.

    Grammar: Uncountable: high liquidity, not a liquidity. Often used in financial contexts.

    Patterns

    • liquidity of an asset
    • market liquidity
    • provide liquidity

    Government bonds are known for their high liquidity, so investors can sell them quickly.

    The stock's liquidity dried up after the scandal, making it hard to trade.

    Real estate has low liquidity because selling a property takes time.

  2. noununcountablebusinessfinance

    The state of having enough cash or easily sold assets to pay debts and meet financial obligations.

    Grammar: Uncountable: the company has liquidity. Often used with verbs like maintain, improve, or lack.

    Patterns

    • maintain liquidity
    • lack liquidity
    • liquidity crisis

    The bank failed because it did not have enough liquidity to cover withdrawals.

    Small businesses often struggle with liquidity during economic downturns.

    The government injected cash into the market to improve liquidity.

Common combinations

market liquidity
Market liquidity refers to how easily assets can be traded in a market.
liquidity crisis
The sudden liquidity crisis forced several banks to seek emergency loans.
provide liquidity
Central banks provide liquidity to keep the financial system stable.
liquidity ratio
Analysts watch the company's liquidity ratio to assess its short-term health.
tight liquidity
Tight liquidity conditions made it difficult for firms to borrow.

Synonyms and how they differ

cash flow
Cash flow is the movement of money in and out of a business; liquidity is about having enough easily accessible cash or assets.
solvency
Solvency means having more assets than debts; liquidity is about being able to pay debts as they come due, even if overall solvent.

Opposites

illiquidity

Word family

liquid adjective
In finance, easily converted into cash.
liquidate verb
To convert assets into cash or close a business.
illiquid adjective
Not easily converted into cash without a loss in value.

Commonly confused: liquidity or liquidation?

liquidity vs liquidation

Liquidation is the process of closing a company and selling its assets; liquidity is the ease of converting assets to cash.

Practice

A company can be profitable but still face a ______ crisis if it cannot pay its bills on time.

Make it your own

Write a sentence using “liquidity”, then check it and compare it with the examples above.

Your sentence stays on this page and is not sent anywhere.

Explore more words