What is liquidity in SAP IS-B-SA-ALM - Asset/Liability Management?

SAP Term: liquidity

• Component: IS-B-SA-ALM

• Component Name: Asset/Liability Management

• Description: Daily turnover volume of an investment of capital, usually a stock market investment. In special cases, the liquidity is the ability to sell a capital investment at a fair price.

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• Key Concepts: 
  Liquidity is a measure of an organization's ability to meet its short-term financial obligations. It is the amount of cash or cash equivalents that an organization has available to pay its bills. In SAP Asset/Liability Management (IS-B-SA-ALM), liquidity is used to measure the financial health of an organization and to ensure that it has enough cash on hand to meet its short-term obligations.
  
  How to use it: 
  In SAP Asset/Liability Management, liquidity is measured by calculating the ratio of liquid assets to total liabilities. Liquid assets are those assets that can be quickly converted into cash, such as cash, marketable securities, and accounts receivable. Total liabilities are all of the organization's current liabilities, such as accounts payable, taxes payable, and short-term debt. The higher the ratio of liquid assets to total liabilities, the better the organization's liquidity position.
  
  Tips & Tricks: 
  It is important to monitor liquidity on a regular basis in order to ensure that an organization has enough cash on hand to meet its short-term obligations. Additionally, it is important to consider other factors when assessing an organization's liquidity position, such as the availability of credit lines and other sources of financing.
  
  Related Information: 
  For more information about liquidity and how it is used in SAP Asset/Liability Management, please refer to the SAP Help Portal or contact your local SAP representative.