In accounting, liquidity refers to the ability of an individual or a business to meet financial obligations using only liquid assets on hand - the ability to repay debts as they mature. Liquidity in accounting is calculated by comparing liquid assets to current obligations, or financial commitments that mature within a year. There are various accounting liquidity ratios available, each defining "liquid assets" differently. Analysts and investors use these to identify firms with a high liquidity level. It is also used as a depth gauge.

Accounting liquidity refers to a company's ability to meet its short-term obligations using its most liquid assets. These assets, such as cash, marketable securities, and receivables, can be quickly converted into cash without significant loss of value. The key measures of liquidity include the current ratio, quick ratio, and cash ratio. The current ratio compares current assets to current liabilities, providing a broad view of liquidity. The quick ratio excludes inventory from current assets, offering a more stringent assessment. The cash ratio considers only cash and cash equivalents against current liabilities, giving the most conservative view. High liquidity indicates a strong ability to pay off debts, while low liquidity can signal potential financial distress.