Cash, and cash equivalents: It doesn't get much more liquid than cash.Here are some of the types of liquid assets: Even among certain asset types, liquidity can vary - some real estate assets may be more liquid than others, for example. Liquid assets examplesĪssets come in a variety of types, and are spread across a spectrum of liquidity. But remember, they're usually used for businesses and not necessarily calculating personal liquidity. There's a lot more to know about these ratios alone. It's another method for calculating whether the company's current assets exceed its liabilities. The current ratio also helps determine if a company can handle its short-term costs, but incorporates more variables into the calculation.The quick ratio takes into account a company's most liquid assets, and calculates whether it can meet its short-term (within one year) costs.Two of the most common are the quick ratio and the current ratio: This can help them make investment or spending decisions. When considering liquidity for businesses and organizations, analysts can use solvency and liquidity ratios to determine their ability to meet short- and long-term financial obligations. Cash, of course, also fits the bill, as it can be used by anyone at any time. That is, they're things like stocks, or other easily sold securities such as US Treasury bonds. The same goes for other assets like stocks or exchange-traded funds: Stocks can be easily traded or sold for cash since there's always an interested buyer.įinally, the vast majority of liquid assets also are the type most commonly owned by investors. And because banks are liable for the the safely securing your funds, they're also protected. The cash in it is considered a liquid asset because the process of getting it out is as easy as a trip to the ATM. Think about the cash you may have in a bank account, for example. The process of selling or trading the asset also needs to be both secure and simple for it to be truly liquid.Something that there's not a buyer readily available for." 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. The more difficult or time consuming it is to sell an asset, the less liquid the asset is - otherwise known as illiquid. A liquid asset can be converted to cash quickly.When there's always a buyer, the asset is easy to sell or trade, making it more liquid. That means that there are buyers and sellers and the asset is always (or nearly always) in demand at some price. A liquid asset must exist or be traded in an existing, established market.How liquid assets workįor an asset to be considered truly liquid, there are several boxes to tick: But liquid assets tend to include things like money in bank accounts, certificates of deposit (CDs), and even certain types of bonds such as US Treasuries. Each type of asset has a differing level of liquidity.
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