Why Is Liquidity Important for Businesses

question 136

Essay

Why is liquidity important for businesses?

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Definitions:

Consolidated Balance Sheet

A balance sheet that provides a financial snapshot of a parent company and its subsidiaries as one single entity, consolidating all assets, liabilities, and equity.

Equipment

Tangible property used in the operation of a business that is not intended for sale in the ordinary course of business.

Acquisition Differential

The disparity between the acquisition cost and the fair market value of the identifiable net assets obtained.

Cumulative Preferred Shares

Type of preferred stocks where dividends accumulate if not paid in a given year, and must be paid out before common stock dividends can resume.