Operational Stability: High liquidity ensures that a business can meet its immediate financial commitments, such as paying suppliers, employees, and other operational expenses. Investment Opportunities: Having liquid assets allows entrepreneurs to take advantage of sudden investment opportunities that may arise. Risk Mitigation: Liquidity acts as a safety net in times of financial distress, helping the business to stay afloat during downturns. Creditworthiness: Lenders and investors often look at a company's liquidity to assess its financial health and stability, affecting the business’s ability to secure loans or attract investment.