Liquid cash or liquid assets are a type of asset that can be converted to cash quickly without taking a large impact to the value of the item. Liquid assets are considered to be almost as good as cash reserves because their prices are stable when sold.
Can a liquid asset be converted to cash quickly?
A liquid asset can be converted to cash quickly. The more difficult or time consuming it is to sell an asset, the less liquid the asset is — otherwise known as illiquid. Collins says an illiquid asset is something that requires at least some leg work to exchange for cash: "An illiquid asset would be anything I need to find a buyer for.
What is a liquid asset?
A liquid asset is a type of asset that can be rapidly converted into cash while keeping its market value. There are other factors that make assets more or less liquid, including: Cash on hand is the most liquid type of asset, followed by funds you can withdraw from your bank accounts.
What is considered a non-liquid asset?
Land, real estate investments, equipment, and machinery are considered types of non-liquid assets because they take time to convert to cash, costs can be incurred to convert them to cash, and they may not convert to cash at all. Examples of liquid assets held by both individuals and businesses include:
