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Liquidity position refers to a company's ability to meet its short-term financial obligations. It is a measure of a company's solvency, specifically its capacity to convert assets into cash to pay off its debts as they come due. A strong liquidity position indicates that a company has sufficient liquid assets to cover its liabilities.

Key metrics used to assess liquidity position include the current ratio, which is the ratio of current assets to current liabilities, and the quick ratio (or acid-test ratio), which excludes less liquid assets like inventory from current assets. A higher current ratio and quick ratio generally suggest a healthier liquidity position.

Factors influencing a company's liquidity position include the management of working capital, access to credit lines, and the efficiency of its cash conversion cycle. Poor liquidity can lead to difficulties in paying suppliers, employees, and lenders, potentially resulting in operational disruptions or even bankruptcy. Conversely, excessive liquidity might indicate that a company is not efficiently utilizing its assets to generate returns. Maintaining an optimal liquidity position is a crucial aspect of financial management.