Abstract
Liquidity risk can be measured by two main methods which are liquidity gap and liquidity ratios. The liquidity gap is the difference between assets and liabilities at both present and future dates. Liquidity ratios on the other hand are three liquidity ratios and they include the current ratio, the quick ratio, and the capital ratio. Liquidity management is very important for every organization that expects to pay current obligations on business, for example operating and financial expenses that are short-term. Liquidity, therefore, not only helps ensure that a person or business always has a reliable supply of cash close at hand, but it is a powerful tool in determining the financial health of future investments as well. Under critical conditions, a lack of enough liquidity even results in a bank‘s bankruptcy. The objective of this paper is to study the liquidity position of the business unit, to measure the liquidity positions of the business unit, and to provide valuable suggestions to the company.
Keywords: Liquidity, financial performance, Company performance
References
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