What are liquid assets?

liquid assets are cash at hand or any tangible or intangible item that can be quickly and easily converted to cash, usually within 20 days without losing a large part of its value. These assets are among the most basic types of financial resources used by consumers, companies and investors. Cash and control accounts are the two most visible forms of liquid assets.

currency

statutory payment for purchases and settlement of outstanding debts, the currency remains the most common type of liquid asset used by consistently retail consumers. The money that is invested in the savings or check -in account is considered to be a liquid asset because it is possible to access the funds immediately to compensate for debts. The debit card offers consumers even more access to immediate liquid assets.

Investments

Some interest investments can be quickly disposed of and qualified as liquid assets. Shares in the cash market, bonds, mutual fOnt and cash value up to pivot insurance are examples of investment that can provide quick cash if necessary. According to this definition, they can also qualify for deposit and shares certificates. Although the actual market liquidity of each asset may differ, the key is that there are always people who want to buy these items, so they can be sold relatively easily. In the case of some assets owned, only the percentage of the asset can be considered.

other assets

The final settlement granted by the court for damage in court proceedings can also be considered as a liquid asset depending on the terms of payment stipulated by the court. Returning taxes and ward funds are often included in the working definition of liquid assets.

Less liquid and illicit assets

mortgages are sometimes considered a liquid asset, but are much less liquid than many other types. FactESPOKUD must be rapidly liquidated, and is also more likely to be sold at lower than its value; If the market is unstable, it may also be difficult to determine the actual value of real estate. Because the key part of the liquidity is that the asset is sold at or very close to the actual value, it means that the property is often considered “illicit” or is not easy to sell.

Any item for which there is no specified value is not considered to be a liquid asset, although this item could be sold at a high price. If the market is small or uncertain for the item, the sale could significantly affect its value. Even the shares, usually considered a liquid asset, could be dislike if a large block for sale was given, which could reduce its market value.

business assets

For businesses, liquid assets may include cash, tradable securities and receivables. Cash equivalents that can be quickly rewrite as neededST for cash, is also considered liquid. Entrepreneurship must be liquid Enough to make expenses, but you do not have so much money at hand that short-term investment opportunities are not monitored.

Companies often divide their assets into net liquid, fast and current assets. Pure liquid assets would remain if all the debts of the businesses were paid off. Fast assets are the ones that can be transferred to cash immediately, while the current assets are the one that can be converted to one year.