It's one of the most often-asked questions in business.
Total liquidity is a better focus for business needs than cash alone.
Financial experts use the term Working Capital, defined as Current Assets minus Current Liabilities, to measure the general liquidity of a business. The cash conversion cycle is a tool that can be used as a guideline for liquidity. It combines widely used financial ratios calculated with financial statement data. An owner can use this tool, along with a cash forecast, to determine how much liquidity a business needs. Annual Net Sales 1.