Liquid assets

Key Takeaways

1. Liquid assets are those assets, which are either cash or can be quickly converted into cash, such as cash, bills receivable, short term investment, etc.
2. A non – liquid asset is any assets that require a significant amount of time to convert it into cash.
3. Liquid assets guarantee the company’s potential to meet its financial obligations and operating expenses.

Liquid assets are assets which can be easily converted into cash, without any significant loss in monetary value.

Example

Liquid assets include cash and cash equivalents, marketable securities, and accounts receivable.

Liquid assets meaning

Liquid assets are those assets, which are either cash or can be quickly converted into cash, such as cash, bills receivable, short term investment, etc. Liquid assets can be bought and sold freely; they are mostly stock market securities. Liquid Assets can be government bonds, money market securities. The liquid assets are also called quick assets because these are the assets that can be disposed of quickly.

Liquid assets list

1. Savings account, cash – highly liquidity
2. Cash in hand, cash in the bank, cash equivalents
3. Accrued Income
4. Stocks
5. Marketable Securities
6. Tax refunds and certificate of deposits

Why are liquid assets important?

The liquid assets are considered as one the essential factor to achieve success in the business world. Liquid assets guarantee the company’s potential to meet its financial obligations and operating expenses. Also, in the unseen, unexpected scenarios like a market downturn, recession, etc., the liquid assets protect the company from going down.

Non – liquid assets

A non – liquid asset is any assets that require a significant amount of time to convert it into cash. Example Land or House, It may take more time to find a buyer who shows a willingness to purchase the property, and after that, it takes several more time to complete the transaction.