Liquidity at Risk (LaR) is a financial metric used to assess the potential decrease in liquidity a firm may face during a specified time period under adverse market conditions. This metric helps organizations understand how much liquidity might be lost if they encounter stressed market conditions, which can hinder their ability to quickly convert assets to cash without significant losses. Liquidity is crucial for businesses, as it affects their ability to meet short-term financial obligations, invest in opportunities, and manage unforeseen expenses.
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