Several components contribute to a company's liquidity:
Cash and Cash Equivalents: These are the most liquid assets, including actual cash, bank deposits, and short-term investments. Accounts Receivable: Money owed to the company by customers for goods or services delivered. Efficient accounts receivable management can significantly impact liquidity. Inventory: While less liquid than cash, inventory can be converted into cash through sales. However, high inventory levels can also tie up capital. Short-term Investments: These are investments that can be easily liquidated, such as marketable securities.