Why is liquid capital considered illiquid?

Liquid capital is considered “liquid” since it is able to be fluidly converted into cash. Illiquid assets, on the other hand, are not easily turned into money or take a longer time to be converted into cash. Liquid capital makes up half of a person’s net worth, with the other half belonging to their long-term assets.

What is non-liquid capital?

Non-liquid assets, or illiquid assets, are types of assets that cannot be easily converted into cash within a short period of time. These assets may include things like real estate, businesses, and physical assets such as equipment and machinery.

What is a liquid capital asset?

There are various criteria an asset meets to be considered liquid capital. For example, liquid assets exist within an established market, which allows individuals and businesses to establish ownership easily, and they have a substantial number of interested owners. Related: What Is Capital in Business?

What is the opposite of liquid capital?

The opposite of liquid capital is an asset, such as real estate, that's not as easy to convert into funds. Prospective business owners and franchisees care about liquid capital because having enough available cash or liquid capital is essential for starting a company.