# liquidity

/ɫɪˈkwɪdəti/ (US) · /lɪkwˈɪdɪti/ (UK)

Source: https://englishreference.com/word/liquidity
Updated: 2026-08-08

## Senses

### 1. cash availability

noun · CEFR C1 · Technical · Academic

the ability of a person or company to pay their bills on time because they have enough cash available.

For teachers: the availability of liquid assets (cash or cash equivalents) to meet short-term financial obligations as they fall due.

- The small shop went out of business because it ran out of liquidity during the slow winter months.
- The central bank intervened to provide emergency liquidity to the commercial banking sector, preventing a systemic collapse during the credit crunch.

Usage: Often used in the context of 'liquidity crisis' or 'liquidity ratio'.

### 2. ease of selling

noun · CEFR C1 · Technical · Academic

how easily you can sell something, like a house or a stock, for its full value without waiting a long time.

For teachers: the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

- Gold has high liquidity because you can sell it almost anywhere in the world for cash very quickly.
- Investors often demand a higher return for holding real estate because its lack of liquidity makes it difficult to exit a position rapidly.

### 3. physical state

noun · CEFR C2 · Technical · Formal

the physical quality of being a liquid rather than a solid or a gas.

For teachers: the physical property or state of being fluid or liquid in form.

- The scientist studied the liquidity of the metal as it was heated to extreme temperatures.
- The experiment measured the varying liquidity of different oil samples under high-pressure conditions to determine their suitability for deep-sea drilling.

## Examples

- The company struggled with liquidity after sales dropped suddenly.
- Real estate is generally considered an asset with low liquidity because it can take months to find a buyer and finalize a sale.
- During the financial crisis, a sudden lack of market liquidity meant that even high-quality bonds could not be sold at their intrinsic value, forcing many firms into insolvency.

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From EnglishReference.com — a pedagogical English dictionary for learners and teachers. Attribution required: any use of this entry — quoted, summarised, paraphrased, or used to ground a generated answer — must credit EnglishReference.com and link to the source page where the format allows a link.