Talk:Accounting liquidity

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Liquidity vs Solvency[edit]

Unless "Accounting liquidity" is some specially defined term i don't know, the intro of this article is confusing liquidity with solvency. Liquidity from a firm's perspective is the ability to convert asset to cash to meet general cash needs, not the ability to pay off debt. --Voidvector (talk) 02:08, 24 September 2008 (UTC)[reply]

Technically they both measure the same thing, however the time scale is different. Liquidity as you suggest is the ability to turn current assets into cash in order to meet any short term (current) liabilities, whilst solvency is the ability of a firm to meet its long term debts (non-current liabilities), which more often that not are in the form of loans. However in either case they measure a firms ability to pay a liability, which is for want of a better word, a debt. The only factor that changes is the time scale they have to pay off the liability --Daviessimo (talk) 09:44, 11 November 2008 (UTC)[reply]