Accounting liquidity


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Accounting liquidity

The ease and quickness with which assets can be converted to cash.

Accounting Liquidity

A measure of a company's ability to meet its short-term obligations using its most liquid assets. That is, accounting liquidity is the ease with which a company can pays its bills and liabilities over the next year, especially if it must convert its assets into cash in order to do so. Two common ways to measure accounting liquidity are the current ratio and the quick ratio.
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Combined with positive balance between A/R and A/P, it allowed EuroChem to increase cash volumes on its accounts more than twice, which considerably improved the company's accounting liquidity.