Liquidity can be viewed to as the amount off time that is usually expected to elapse until an asset is converted into cash or until liability has been paid. The assets below can be ranked according to their liquidity as follows: 1. Short-term investments 2. Accounts receivable 3. inventory 4. Buildings 5. Goodwill
Work Step by Step
Basically, liquidity is highly associated with the conversion of any assets into quick cash and during the evaluation of investments, liquidity is highly considered.