Introduction to the concepts
In our daily lives, we come across these terminologies and tend to think that they mean one and the same thing. However, we must draw and bolden the razor-thin line between the two seemingly similar concepts. Their applicability and epistemology changes with their meaning. In this blog, we will be discussing the meaning of both Solvency and Liquidity. Apart from that, we will also understand what they mean in Accounting and Insurance terms.
It is the ability of any firm or an organization to repay/service its short-term debts […]
What is Liquidity?
The measure of ability with which assets can be easily sold or bought is known as liquidity. The assets which fall under liquidity are known as liquid assets. Cash is considered to be the most liquid asset that one can have. Other than cash, saving accounts, and checkable accounts are also liquid assets. All the types of assets like Real Estate or Equities come under different levels on the liquidity spectrum.
Liquidity of a company
When we use the term “Liquidity” in business, it means the ability of an organization to turn its […]
In another blog, we have already discussed the liquidity ratio for an insurance company and how we can measure it. The liquidity ratio of a company shows the ability of a company to turn its assets into cash. This ratio is used to compare the financial performance of insurance companies and also used to determine how profitable a company is from year to year. Investors and creditors use this ratio to observe the potentiality of an insurance company before investing in it. In this blog, we will discuss a little more about the liquidity ratio and what […]