The ability of an asset to be converted in to cash very quickly is classified as ____________?
Correct answer: C. liquidity
- A. variable securities
- B. convertible securities
- C. liquidity
- D. constant securities
Explanation
Liquidity is the ease and speed with which an asset can be converted into cash without a substantial loss in value. Cash is highly liquid, while fixed assets such as buildings are relatively illiquid.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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