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Glossary term

Liquidity

Definition

Liquidity is how quickly and easily you can turn assets into cash when you need it.

Technical definition

Liquidity is the degree to which assets can be converted to cash promptly without significant loss of value, reflecting an operation's ability to meet short-term obligations.

Why it matters

Liquidity helps a farm handle surprises and timing gaps. Too little can force selling assets at a bad time.

Example

Cash and grain ready for sale are more liquid than land, which takes time to sell.

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