hello students now we will study our next topic that is liquidity and profitability liquidity communicating subsidy what is liquidity liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price liquidity x security assets or efficiencies security liquidity in other words liquidity describe the degree to which an asset can be quickly bought or sold in the market at a price reflecting its intrinsic value liquidity describes is universally considered the most liquid asset because it can also most quickly easily be converted into other asset cash are used to pay for expenses like employee payroll rent utilities and other necessities in the production process there are two main measures of liquidity first is market liquidity and second is accounting liquidity market liquidity refers to the extent to which a market such as a country's stock market or a city's real estate market allows assets to be bought or sold at stable or transparent prices market liquidity markets liquidity and accounting liquidity refers to the ease with which an individual or company can meet their financial obligation with the liquid assets available to profitability is ability of a company to use its resources to generate value in access of its expenses profitability in other words this is a company's capability of generating profit profitability investor creditors and managers uses this key concept to analyze how well a company is doing and future potential it could have if operations were managed properly your investors of profitability are revenue and expenses revenue are the business income this is the amount of money and from customers by selling products or providing services this is the amount of money amount of money utilities foreign expenses profitability looks at the relationship between the revenue and expenses to see how well a company is performing and the future foreign thanks for watching