Liquid Assets

What are Liquid Assets?

Liquid Assets are the assets of the business which can be converted into cash within a short span of time and includes the assets such as cash, marketable securities, and money market instruments and they are shown on the asset side of the balance sheet of the company.

In simple terms, these assets can be transformed into cash rapidly, with a negligible effect on the price available in the entire market. Such assets comprise of government bonds and money market instruments. The foreign currency marketCurrency MarketFor those wishing to invest in currencies, the currency market is a one-stop solution. In the currency market different currencies are bought and sold by participants operating in various jurisdictions across the world. It is important in international trade and is also known as Forex or Foreign more is believed to be globally the highest liquid market across the world since a vast amount of money is being exchanged every day and thus, making it extremely difficult for a person to affect the worldwide exchange rate.

List of Liquid Assets

Savings account and cash are believed to be the greatest usual form of highest liquidity being owned by either individuals or businesses or both. However, several other assets are believed to be more liquid, easily capable of being shifted among the owners, and such assets that are well-established all through the market. Here is the complete list of liquid assets –

  1. Cash in Hand
  2. Cash in Bank
  3. Cash Equivalents
  4. Accrued Income
  5. Promissory NotesPromissory NotesA promissory note is defined as a debt instrument in which the issuer of the note promises to pay a specified amount to a party on a particular more
  6. Government Bonds
  7. Stocks
  8. Marketable SecuritiesMarketable SecuritiesMarketable securities are liquid assets that can be converted into cash quickly and are classified as current assets on a company's balance sheet. Commercial Paper, Treasury notes, and other money market instruments are included in more
  9. Accounts ReceivableAccounts ReceivableAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more
  10. Certificates of DepositCertificates Of DepositA certificate of deposit (CD) is an investment instrument mostly issued by banks, requiring investors to lock in funds for a fixed term to earn high returns. CDs essentially require investors to set aside their savings and leave them untouched for a fixed more
  11. Tax Refunds


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 Current Assets vs. Liquid Assets

Liquid Asets vs Current Assets

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Source: Liquid Assets (

Consolidated Liquid Assets

Consolidated liquid assets are securities and cash that can readily be converted into cash, less current liabilities. Its formula is  = Marketable Securities + Cash – Current Liabilities

Holding sufficient cash on hand for paying off all the debts is a significant benefit to borrowers while comforting for lenders. Therefore, analysts employ this as an extremely stringent parameter of determining the company’s capability to successfully meet its near-term debt commitments.

Why are Liquid Assets essential for the business?

While evaluating investments, and considering one’s complete financial condition, liquidity might be a key factor. Essentially, liquidity considered to be any firm’s capability to easily convert any given asset into cash. Further, it is even the capability to purchase or trade any security leaving the asset’s price unaffected.


Overall, the liquid assets are of utmost importance to any individual or a company as it becomes convenient while making emergency debt repayments, purchasing equipment, hiring labor, payment of taxes, and several others. Therefore, any company or an individual willing to start a business or invest strategically needs immediate cash, which is only possible if the entity has readily available cash or such securities that would fetch cash upon easy liquidation.

Liquid Assets Video

This article has been a guide to what are Liquid Assets and its meaning. Here we provide a complete list of liquid assets and how it is different from current assets. You may have a look at these articles below to learn more about Accounting –

Reader Interactions


  1. jaleshwar prasad says

    very nice and helpful

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