liquidity, in economics, represents the quality of assets "Asset (accounting)") to be converted into cash immediately without significant loss of value.[1]​[2]​ In such a way that the easier it is to convert an asset into money, the more liquid it is said to be. By definition, the asset with the greatest liquidity is money, that is, banknotes and coins have absolute liquidity. In the same way, demand bank deposits, known as bank money, also enjoy absolute liquidity and therefore, from a macroeconomic point of view, are also considered money.

As an example, a very liquid asset is a deposit in a bank whose owner can go to the entity at any time and withdraw it or can even do so through an ATM. On the contrary, an illiquid good or asset may be a property in which a long time may have passed from the moment the decision is made to sell it or transform it into money until the money is actually obtained for its sale. If you want to quickly convert it into money, you would have to assume a loss in value with respect to its target market price.

In general, the liquidity of an asset is opposed to the profitability it offers, so it is likely that a very liquid asset offers a small profitability.

A liquid asset has some or more of the following characteristics: (1) it can be sold quickly, (2) with minimal loss of value, (3) at any time. The essential characteristic of a liquid market is that there are willing buyers and sellers at all times.

Liquidity in the company requires special attention in times when bank credit is scarce.

Financial analysis provides simple formulas to measure the degree of liquidity of the company, which will always have a close relationship with its short-term debt figure. The "immediate liquidity" ratio, calculated as Treasury / Current Liabilities, is a simple measure of relating the company's cash to the debts that must be paid over the next year. On the other hand, the "working capital" is a measure of the general liquidity of the company, which relates all its liquid assets (not only the treasury, but also the credits granted to clients and merchandise) with the debts that it must pay in the next year.[3]​.