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Why is liquidity an important indicator that an investor should consider when analyzing share investment opportunities?

Why is liquidity an important indicator that an investor should consider when analyzing share investment opportunities?

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Answer #1

Liquidity is an important indicator that an investor should consider because liquidity helps in paying off its short term liabilities like creditors. Liquidity helps to understand the cash position of the investor.
Cash flow statements and cash cannot be manipulated whereas Balance sheet and Income statement can be manipulated.

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