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Jun 27, 2024 · A liquid asset is an asset that can easily be converted into cash in a short amount of time. Liquid assets include things like cash, money market instruments, and marketable securities.
What is a Liquid Asset? A liquid asset is cash on hand or an asset other than cash that can be quickly converted into cash at a reasonable price. In other words, a liquid asset can be quickly sold on the market without a significant loss of its value.
Nov 11, 2024 · In accounting, liquid assets are assets that can be easily converted into cash without a significant impact on their market value. They are valuable for businesses as they provide rapid access to required funds to cover short-term obligations or unexpected expenses.
- 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.
Guide to Liquid Assets and its definition. We explain it with examples, vs fixed assets, list of them and vs current assets.
Liquid assets are either cash, cash equivalents or they can be converted into cash at very short notice. They are also referred to as Quick Assets. Quick assets can be calculated as [Current Assets – Inventory – Prepaid Expenses].
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Definition: Liquid assets are resources used by all market participants that can be easily converted into cash without losing their value. Typical examples are banknotes, checking accounts, and government bonds.
