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- Assets aren’t either liquid or illiquid. We use the term “liquidity” to describe where an asset falls on a spectrum ranging from cash (the most liquid asset because you can use it to buy anything) to items like art, jewelry, and collectibles that are characteristically illiquid.
www.penfed.org/learn/what-is-the-difference-between-liquid-and-illiquid-assets
Oct 14, 2024 · Several factors must be present for an asset to be considered liquid. It must be an item in an established market with a large number of interested buyers. Ownership must be easily transferred.
- Steven Nickolas
- 2 min
- Cash. Includes physical money (local and foreign currency) as well as the savings account and/or current account balances.
- Cash equivalents. Cash equivalents are investment securities with a maturity period not exceeding a year. Examples include treasury bills, treasury bonds, certificates of deposit, and money market funds.
- Marketable securities. Stocks, bonds, and exchange traded funds (ETFs) are examples of marketable securities with a high degree of liquidity. They can be sold easily and it usually takes just a few days to receive the cash from their sale.
- Accounts receivable. Money owed to a business by its customers for goods and services provided makes up accounts receivable. The liquidity of accounts receivable varies.
Jun 27, 2024 · A liquid asset is an item of future economic benefit to a company that can easily be exchanged for cash. On the other hand, illiquid assets are more difficult to sell.
Jul 19, 2022 · Assets like stocks and bonds are very liquid since they can be converted to cash within days. However, large assets such as property, plant, and equipment are not as easily converted to cash.
- Jim Mueller
Feb 9, 2023 · Assets aren’t either liquid or illiquid. We use the term “liquidity” to describe where an asset falls on a spectrum ranging from cash (the most liquid asset because you can use it to buy anything) to items like art, jewelry, and collectibles that are characteristically illiquid.
Jul 30, 2024 · Cash. Cash is the ultimate liquid asset. Besides holding physical currency and ATM withdrawals, cash can be accessed via your checking account and peer-to-peer payment apps.
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Nov 5, 2024 · Liquid assets are valuable for quick cash access, helping businesses handle emergencies and meet obligations. However, their low returns, especially cash on hand, make them more susceptible to inflation. Illiquid assets, while difficult to convert to cash, provide higher long-term returns and stability.
