Liquidity

Liquidity
A market is liquid when it has a high level of trading activity, allowing buying and selling with minimum price disturbance. Also a market characterized by the ability to buy and sell with relative ease. The New York Times Financial Glossary

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liquidity li‧quid‧i‧ty [lɪˈkwɪdti] noun [uncountable]
1. ECONOMICS the amount of money in an economy at a particular time:

• The central bank injected liquidity into the economy (= increased liquidity ) last month when it began repurchasing government bonds.

— see also money supply
2. FINANCE when investments can easily be bought and sold on a particular financial market:

• As investors learned in the last stock market crash, liquidity can disappear quickly when everyone tries to sell at once.

3. FINANCE ACCOUNTING the ability of a company to make payments to employees and suppliers, interest payments to banks etc:

• Disappointing sales and resulting losses have caused liquidity problems.

4. BANKING the ability of a bank to pay back people and organizations that have put money in the bank and that want to take their money out:

• Customers began withdrawing deposits, causing difficulties for the liquidity of the bank.

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   The ease with which financial instruments can be traded on a market and turned into cash. Markets or instruments are described as being liquid, and having depth or liquidity, if there are enough buyers and sellers to absorb sudden shifts in supply and demand without price distortions. The opposite of illiquid. The term can also be used loosely to describe cash flow in a business, so a company that has fallen into a liquidity trap may have growing orders and production but has run out of cash.
   ► See also Illiquid.

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liquidity UK US /lɪˈkwɪdɪti/ noun [U]
► ACCOUNTING, FINANCE the fact of being able to be changed into cash easily: »

the liquidity of assets/investments

→ Compare ILLIQUIDITY(Cf. ↑illiquidity)
► ACCOUNTING, FINANCE the state of having enough money or assets to pay any money that is owed: »

The business no longer has sufficient liquidity to meet its operational needs.

► (also market liquidity) FINANCE, STOCK MARKET the ability to buy or sell easily on a market, for example a market in shares or bonds: »

They were forced to intervene, in order to maintain the liquidity of the market.


Financial and business terms. 2012.

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Synonyms:
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Look at other dictionaries:

  • liquidity — liq·uid·i·ty /li kwi də tē/ n: the quality or state of being liquid Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. liquidity …   Law dictionary

  • Liquidity — Li*quid i*ty (l[i^]*kw[i^]d [i^]*t[y^]), n. [L. liquiditas, fr. liquidus liquid: cf. F. liquidit[ e].] The state or quality of being liquid. [1913 Webster] [1913 Webster] …   The Collaborative International Dictionary of English

  • liquidity — 1610s, quality of being liquid, from L.L. liquiditatem (nom. liquiditas), from L. liquidus (see LIQUID (Cf. liquid)). Meaning quality of being financially liquid is from 1897 …   Etymology dictionary

  • liquidity — ► NOUN Finance 1) the availability of liquid assets to a market or company. 2) liquid assets …   English terms dictionary

  • liquidity — [li kwid′i tē] n. 1. the quality or state of being liquid 2. Finance a) the ability of a business to meet obligations without disposing of its fixed assets b) the ability of a market to absorb buying and selling without producing undue price… …   English World dictionary

  • liquidity — A market which allows quick and efficient entry or exit at a price close to the last traded price. The ability to liquidate or establish a position quickly is due to a large number of traders willing to buy and sell. The CENTER ONLINE Futures… …   Financial and business terms

  • Liquidity — 1. The degree to which an asset or security can be bought or sold in the market without affecting the asset s price. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid… …   Investment dictionary

  • liquidity — [[t]lɪkwɪ̱dɪti[/t]] N UNCOUNT: oft N n In finance, a company s liquidity is the amount of cash or liquid assets it has easily available. [TECHNICAL] The company maintains a high degree of liquidity. ...serious liquidity problems …   English dictionary

  • liquidity —    the ability to pay your debts as they fall due    Only euphemistic when you lack it:     Sir Jeremy came to me saying that he lacked liquidity... that s the delicate way these European aristocrats say in deep shit. (Deighton, 1993/2)    A… …   How not to say what you mean: A dictionary of euphemisms

  • liquidity — noun /lɪkˈwɪdəti/ a) The state or property of being liquid. Some stocks are traded so rarely that they lack liquidity. b) An assets property of being able to be sold without affecting its value; the degree to which it can be easily converted into …   Wiktionary

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