Liquidity

In accounting, liquidity (or accounting liquidity) is a measure of the ability of a debtor to pay their debts as and when they fall due. It is usually expressed as a ratio or a percentage of current liabilities. Liquidity is the ability to pay short-term obligations.

For most businesses, current assets consist of cash in the bank and receivables.  Do these amounts exceed your current liabilities as shown on your Balance Sheet?  Current Liabilities would be accounts payable, credit card debt, payroll tax liabilities and loan repayment amounts for the current year?  If not, you are depending on future revenue to cover existing debt.  This is a cause for concern.

You also should consider the collectibility of your receivables.  If you have old, likely uncollectible receivables on the books, it may be misleading.

 

https://en.wikipedia.org/wiki/Current_ratio

https://en.wikipedia.org/wiki/Balance_sheet

http://smallbusiness.chron.com/avoid-liquidity-risks-67742.html