Financial liquidity refers to the ability of a company or individual to pay back its debts and financial obligations. It is typically measured by the ratio of assets to liabilities, which gauges the amount of cash and other liquid assets they have readily available to cover current expenses. The higher the ratio, the better the liquidity position of the business. A sufficient level of liquidity helps businesses stay afloat and survive in difficult economic times. Ultimately, it gives businesses the flexibility to meet their obligations without too much strain on their resources.