Liquidity Risk
Short definition
Liquidity risk is the risk of not turning obligations into cash on time, or only at a fire-sale price. Solvency is separate: assets can exceed debt and cash timing can still break.
Detailed explanation
Funding liquidity (lines, collateral, a closed market) differs from market liquidity (inability to sell an asset without a discount). The 13-week budget catches the first; the maturity wall adds the second and refinancing.
A covenant breach freezes a line; a margin call turns a hedge into a liquidity shock. Trapped cash splits group balances from usable cash.
Why it matters for the CFO
In Türkiye a cash squeeze usually shows up in working capital, tax and principal before profit has fully eroded.
How to read it
The cash balance is not liquidity; usable, unencumbered cash plus undrawn committed lines is. The current ratio overstates stock-based “liquidity”.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.