Liquidity

Formal

Cash is a liquid asset - and liquidity is a term that relates to the ability of all assets to be transformed into cash or cash equivalents at short notice. Used as a measure on businesses to assess their ability to pay their debts as they fall due for payment.

Real-world Example

A business has $500k in cash and assets that can be quickly turned into cash, against $300k of bills due this month - strong liquidity, meaning it can comfortably meet its short-term obligations.