I read a new report on the BBC iPhone app this morning and just had to write about it. Over the coming months I will be writing a series of posts on analysing businesses. One area I’ll cover is liquidity and solvency. Liquidity is the ability to turn assets into cash, while solvency is the ability to pay debts as they fall due. Now, we have been hearing quite a lot about some European countries and the US having debt problems. Things really come to a head when those debts cannot be repaid, and to repay them, you need cash. According to the report by the BBC, Apple Inc had $76 billion in liquid resources (cash and other assets easily converted to cash) according to its most recent accounts. The report puts the liquid resources of the US $73 billion. When I read this I started to understand why it is so important for the US to raise more cash – hence the need to raise it’s borrowing limit. If the US were a small business, there’s a good chance it would be gone by now, as it would have little cash and no way to raise more. Watch out for more posts on business analysis soon. In these posts I’ll write about some common ways to evaluate and analyse how a business is doing.