1. ability of current assets to meet current liabilities when due. The degree of liquidity of an asset is the period of time anticipated to elapse until the asset is realized or is otherwise converted into cash. A liquid company has less risk of being unable to meet debt than an illiquid one. Also, a liquid business generally has more financial flexibility to take on new investment opportunities.

2. immediate convertibility into cash without significant loss of value. For example, marketable securities are more liquid than fixed assets, because securities are actively traded in an organized market.