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The goal of achieving adequate liquidity and an appropriate profit goals are incompatible Chief Financial Officer he went off to get the appropriate profit Aakablh availability of adequate liquidity is needed ...
Appropriate: It means the matching between the types of funds by for and between. The uses of these funds
. The task of liquidity management to achieve compatibility between the collection of liquidity in the shortest time, and the best price, and between investment and employment in
Liquidity is that when a company carry more liquid resources to met short terms liabilities and debts.
where as Solvency means the company in position to meet the long term liabilities for the future.
Under liquidity we count Liquid Assets, Quick Assets, and those assets which we can convert in cash within or less then6 months
Under Solvency we count the company's Liquid Assets as well as long terms assets.
Liquidity is the capacity to meet obligations especially Current Liabilities, right now.
Solvency is the capacity to meet all obligations when the enterprise is(deemed) Liquidated--it defines the Strength of your assets.
To be more precise (e.g): One may be able to buy a (say) Lap top by using a Credit Card....there is liquidity. At the same time if the ability to repay the credit card by own means depends upon the flow of income or the assets you have without going for another debt trap is called Solvency.
Solvency and liquidity are both terms that refer to an enterprise’s state of financial health, but with some notable differences. Solvency refers to an enterprise's capacity to meet its long-term financial commitments.
Liquidity refers to an enterprise’s ability to pay short-term obligations; the term also refers to its capability to sell assets quickly to raise cash. A solvent company is one that owns more than it owes; in other words, it has a positive net worth and a manageable debt load. On the other hand, a company with adequate liquidity may have enough cash available to pay its bills, but it may be heading for financial disaster down the road.
Liquidity is a position in relation to assets, whereas solvency is in relation to firm or company
Solvency refers to the financial soundness of an entity in their ability to repay their debts. If a company or person is able to pay off all their debts when they come due, then they're considered to be solvent. If an entity is incapable of paying back their debts, they become insolvent. They're completely insolvent when they're unable to pay back any debts and they enter bankruptcy. Liquidity refers to investments of entities (people or companies). Money is considered Liquid in the state of cash. If a company is considered liquid, what that actually means is that all their money and investments are placed in holdings or forms that can easily be distributed as cash. Non-liquid investments are investments that are obligated for a certain amount of time. Some investments will take days, weeks, months, or even years to turn liquid (when you can get your money out of it). Sometimes it's just the red tape, other times you actually have to sell an item in a market, and other times you're contractually obligated to keep your money insolvent for a set amount of time.
Agree with all
solvency
is the probability of obstructed the company
liquidity
the availability of liquid assets to company
Liquidity is the firms ability to pay its current obligations as and when it comes and remains in the business in sort run and solvency on the other hand to pay its non current obligations as and when it comes and remains in the business in the long run
Liquidity refers to investments of entities (people or companies). Money is considered Liquid in the state of cash. If a company is considered liquid, what that actually means is that all their money and investments are placed in holdings or forms that can easily be distributed as cash. Non-liquid investments are investments that are obligated for a certain amount of time. Some investments will take days, weeks, months, or even years to turn liquid (when you can get your money out of it). Sometimes it's just the red tape, othertimes you actually have to sell an item in a market, and other times you're contractually obligated to keep your money insolvent for a set amount of time.
Solvency refers to the financial soundness of an entity in their ability to repay their debts. If a company or person is able to pay off all their debts when they come due, then they're considered to be solvent. If an entity is incapable of paying back their debts, they become insolvent. They're completely insolvent when they're unable to pay back any debts and they enter bankruptcy.
Liquidity and solvency are dashboard signs of your financial health. The former, also known as cash flow, measures your ability to pay monthly bills and meet emergencies that require cash. Solvency refers to net worth, which is how much you have left to call your own if you pay off your debts. When you can use cash, you are less likely to rely on credit for purchases and meeting the costs of living. If you can remain liquid, you avoid drowning in debt and becoming insolvent.
