Liquidity is how easily assets can be turned into spendable cash. Poor liquidity, a liquidity crisis, provide liquidity.
A business can be profitable and still fail for want of it, because bills fall due before invoices are paid — that gap is what kills most solvent companies. Cash is perfectly liquid and a house is not. The image is of assets flowing like liquid.
1nounliquidityHow easily assets can be turned into cash.
“The company owned valuable buildings but had no liquidity to pay its staff.”
liquidity is a financial quality.
Liquid plus -ity, from Latin liquidus, flowing. The financial sense pictures assets as able to flow.
Latin
liquiditas
English, today
liquidity
From liquid + -ity, from Latin liquiditas. In their financial and economic senses, this and various associated terms all involve portraying assets figuratively as if they were liquids and solids, dissolving the solids with solvents, freezing and thawing, and so on.
Etymology from Wiktionary, CC BY-SA