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- Liquid assets are vital for maintaining financial flexibility and meeting short-term obligations. They are important in evaluating a company's liquidity ratios such as the current ratio and quick ratio. Liquid assets typically offer lower returns compared to less liquid investments like real estate or long-term bonds.
library.fiveable.me/key-terms/principles-finance/liquid-assetLiquid asset - Vocab, Definition, and Must Know Facts - Fiveable
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
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.
Liquid assets can be easily converted into cash with little or no loss in value. These assets are important because they provide immediate access to funds without selling off larger, more complex investments that may take time to liquidate.
Jun 27, 2024 · A liquid asset is an asset that can easily be converted into cash within a short amount of time. Liquid assets generally tend to have liquid markets with high levels of demand and security....
Oct 28, 2024 · A liquid asset is any type of asset your business holds that can be quickly converted into cash without losing its market value. Several factors can affect an asset’s liquidity, such as: How long it takes to sell the asset. How easy it is to transfer ownership of the asset. Whether there's a market for selling that asset.
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Jul 30, 2024 · Liquidity describes your ability to exchange an asset for cash. The easier it is to convert an asset into cash, the more liquid it is. And cash is generally considered the most liquid...
