Liquidity Crisis
Short definition
A liquidity crisis is the inability to turn a due obligation into payable cash. Solvency is separate: assets can exceed debt and the till can still empty.
Detailed explanation
Triggers: a collections shock, a line cut, a margin call, a tax instalment, principal. The 13-week budget shows the crisis early; a balance-sheet ratio is late.
The crisis can be systemic (market closed) or idiosyncratic (your covenant). In the first, even collateral may not open a line.
Why it matters for the CFO
In Türkiye a cash squeeze often arrives before profit has fully eroded. In the crisis moment an equity issue is a fire-sale price.
How to read it
Cash + committed lines < 13-week outflows − inflows = distance to crisis. The current ratio does not measure that distance.
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Definitions are educational. They are not investment, credit or tax advice.