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Jun 27, 2024 · A liquid asset is an asset that can easily be converted into cash within a short amount of time. ... inventory may be considered a liquid asset if it has a large market with highly visible ...
May 18, 2024 · Other liquid assets include stocks, bonds, and other exchange-traded securities. Tangible items tend to be less liquid, meaning that it can take more time, effort, and cost to sell them (e.g., a ...
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Jan 22, 2023 · A company's liquid asset total also impacts a number of key financial ratios. Companies use metrics such as the cash, current and quick ratio to assess how well the business manages its money ...
- Claire Boyte-White
- 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.
Assets are listed on the balance sheet in order of liquidity, with the most liquid types listed at the top of the balance sheet and the least liquid listed at the bottom. Although there is no direct measure of the liquidity of each asset, businesses and market analysts use various financial ratios , such as the quick ratio and cash ratio, to identify the overall level of liquidity of a company.
Jul 30, 2024 · Money market funds are a type of mutual fund that only owns highly liquid assets, like cash, CDs and government-backed debt. Because their components are highly liquid, their value is highly stable.
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Jul 18, 2024 · A liquid asset can be converted to cash quickly: The more difficult or time-consuming an asset is to sell, the less liquid the asset is. Collins says an illiquid asset requires at least some leg ...