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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. Both...
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.
- 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 8, 2022 · In accounting terms, liquid assets are cash or cash equivalents that are readily convertible to cash. Their liquidation is secure, meaning that the holder can convert them for cash without any issues. Also, it should happen in a short duration of time with little or no loss of value on conversion.
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].
An asset which can be easily transformed into cash in less time and with no loss or little loss in value is known as a liquid asset. Liquid assets are usually compared with cash as the value remains the same whenever sold.
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Jun 27, 2024 · A liquid asset is anything that can be transformed into cash quickly in a short amount of time and with no loss in value. Examples of liquid assets include cash, inventory, accounts receivable, marketable securities, tax refunds, and cash alternatives. Cash is the most liquid asset in the world.
