Liquidity definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. Liquidity can be defined as: Availability of resources to meet short-term cash requirements. Liquidity has to do with our ability to pay for short term obligations, whether they be short term debt or operational needs. Liquidity ratios include the current ration and the quick ration or assed test ration, ratios that measure liquidity by comparing liquid assets to current liabilities.
