Define Liquidity risk
Liquidity risk refers to the difficulties that can arise from an inability of the company to meet its short-term financing needs, i.e. its ratio of short-term assets to short-term liabilities. Specifically, this refers to the organisation’s working capital and meeting short-term cash flow needs.
The essential elements of managing liquidity risk are, therefore, the controls over receivables, payables, cash and inventories.
***********
No comments:
Post a Comment