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Jan 22, 2023 · A business's liquidity is important for many reasons. It directly affects the company's appeal to investors. If a company has $1.5 million in assets, of which $1 million are liquid, that is a sign ...
- Claire Boyte-White
Dec 18, 2023 · Why Liquid Assets Matter. Liquid assets are the lifeblood of daily operations. They are what you use to pay off short-term financial obligations, such as accounts payable, wages, and other immediate expenses. The more liquid assets a business has, the more financial flexibility it possesses.
- Cash. Includes physical money (local and foreign currency) as well as the savings account and/or current account balances.
- Cash equivalents. Cash equivalents are investment securities with a maturity period not exceeding a year. Examples include treasury bills, treasury bonds, certificates of deposit, and money market funds.
- Marketable securities. Stocks, bonds, and exchange traded funds (ETFs) are examples of marketable securities with a high degree of liquidity. They can be sold easily and it usually takes just a few days to receive the cash from their sale.
- Accounts receivable. Money owed to a business by its customers for goods and services provided makes up accounts receivable. The liquidity of accounts receivable varies.
This is why a well-balanced financial portfolio usually includes liquid and non-liquid assets, allowing for long-term growth while maintaining flexibility for short-term needs. A key takeaway from this distinction is that individuals and businesses should not rely solely on fixed assets for financial security.
Sep 24, 2024 · Running a business with ethics at its core is essential for company-wide integrity. Behaving in a consistently ethical manner can lock in a solid reputation and long-term financial rewards for ...
Sep 12, 2023 · Liquidity is essential to meet bills and obligations on time. Having enough cash or liquid assets ensures that you can make your rent, mortgage, utilities and other important payments without defaulting. For businesses, it is important to pay suppliers, employees and other business obligations on time to maintain a good reputation.
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Jul 27, 2023 · Why Are Business Ethics Important? Failure to understand and apply business ethics can result in moral disengagement. “Moral disengagement refers to ways in which we convince ourselves that what we’re doing is not wrong,” Hsieh says in Leadership, Ethics, and Corporate Accountability. “It can upset the balance of judgment—causing us ...
