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  1. Jan 22, 2023 · An asset's liquidity is a function of how easily it can be converted into cash. In corporate finance, liquid assets are those that can be used to pay off...

    • Claire Boyte-White
  2. Jun 27, 2024 · Liquid assets are important because a company consistently needs cash to meet its short-term obligations. Without cash, a company can't pay its bills to vendors or wages to...

  3. Apr 22, 2022 · Liquid assets include cash and anything that can be converted into cash quickly and easily. Learn how they compare with other assets and why they're important for...

    • 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.
  4. Why are liquid assets important for businesses? Liquid assets are vital for businesses because they ensure a company can meet its short-term financial obligations, such as paying bills, suppliers, and salaries.

  5. Jun 13, 2024 · Liquidity ratios are an important class of financial metrics used to determine a debtor's ability to pay off current debt obligations without raising...

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  7. Oct 28, 2024 · Why are liquid assets important? Liquid assets provide you with cash when your business needs it. This cash could cover operational costs such as supplier invoices, employee wages, insurance payments, and ongoing bills. More importantly, liquid assets are invaluable in providing a safety buffer.

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