What does liquidity in financial management refer to?

Liquidity in financial management refers to the ability to convert assets into cash quickly without significantly affecting the asset's price. This concept is crucial for businesses to ensure they can meet short-term obligations and maintain smooth operations. For instance, cash is the most liquid asset; it's readily available for use. Other assets, like inventory or accounts receivable, may take longer to convert into cash, thus being less liquid.

In contrast, the other options focus on different financial aspects. Growth speed pertains to a company's expansion capabilities, debt relates to leverage and financial obligations, and profitability is about how efficiently a company generates earnings compared to its expenses. These factors are important but do not address the specific notion of liquidity, which is fundamentally about cash availability for immediate needs.