Please define the concept of "liquidity" in terms of business.

Liquidity refers to the ability of a business (or person)
to quickly convert assets and holdings into cash. Liquidity refers to the ease with
which such transactions can be completed without a loss in the value of the
asset.

If a business does not have assets that are liquid,
if unexpected expenses arise, the company may suffer from its inability to meet these
expenses because fixed assets cannot easily be turned into
cash.

href="http://www.investopedia.com/terms/l/liquidity.asp">Liquid assets may
be blue chip stocks, which hold a strong value over time and regularly have a high trade
volume, and are very often href="http://www.investopedia.com/terms/m/moneymarket.asp">money market
instruments, such as U.S Treasury bills or certificates of deposit (CDs). The idea is
that when an asset is sold, it must maintain its value. Investopedia defines liquidity
as:

The degree
to which an asset or security can be bought or sold in the [financial] market without
affecting the asset's price. Liquidity is characterized by a high level of [instrument]
trading activity. Assets that can by easily bought or sold, are known as liquid
assets.

Investopedia also
explains that liquidity is the "marketability" of a liquid asset that can quickly be
converted to cash.