Liquidity is the ability of an asset to be converted into cash and is measured as a ratio of assets to liabilities. Liquidity is how quickly your asset can be sold at close to market price. The less time it takes to sell the assets the higher the liquidity. There should always be enough Liquid assets to pay current liabilities. But the higher the liquidity, the lower the profitability of the object. Most investors prefer not highly profitable, but highly liquid assets becauseits faster to get your money back with little loss.