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How does company can manage liquidity efficiently

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Question - A company's liquidity ratio is a measurement of its ability to pay off its current debts with its current assets. Companies can increase their liquidity ratios in a few different ways, including using sweep accounts, cutting overhead expenses, and paying off liabilities. If liquidity risk gets too high, your business might succumb to insolvency a complete inability to pay any of its debts. Insolvency can lead to costly restructuring or a fire-sale on valuable assets. In extreme cases, it can cause a business to declare bankruptcy, or even close its doors for good. However, if you're looking to do this, then it's important to note that a very high liquidity ratio isn't necessarily a good thing.

Required -

a. Does liquidity Matter? Justify your answer based on above statement.

b. How does company can manage liquidity efficiently?

Reference no: EM133151073

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