Why is to much liquidity not good thing?

Liquidity is itself a good thing but too much of everything is not good same goes with too much liquidity as it is known fact that money has it's opportunity cost and if company has too much liquidity cash available without any use for the specific time period, that portion of money is loosing opportunity earn interest on that amount for that specific period of time or may be that money can be utilized for more profitable investing opportunities.

That's why it is the responsibility of financial manager to determine the optimal working capital requirement so that remaining amount could be spend on other areas.

Optimal capital means nor too much liquidity neither shortage of liquidity as both are bad for business.