Liquidity

Definition: 

The ability of a firm to pay its obligations as they fall due, such as wages, inventory purchases, short-term debt repayments and long-term debt obligations.

Cash flow is critical. All firms need a certain amount of liquid assets (Working Capital) to flexibly manage short-term business operations. 

Firms can gain liquidity by selling assets and leasing them, selling stock, equity injection, and using short-term debt.

Ratio and Statement:

Current Ratio (Balance Sheet)