A liquid asset is an asset that can easily be converted into cash in a short amount of time. Liquid assets include things like cash, money marketinstruments, and marketable securities. Both individuals and businesses can be concerned with tracking liquid assets as a portion of their net worth. For the purposes of financial accounting, a company’s liquid assets are reported on its balance sheet as current assets. Liquid assets are things that can be quickly converted into cash without losing value. These come in many different forms, such as cash, stocks, other marketable securities, money market funds and more.

You’ve probably heard the term “liquidity” thrown around when it comes to your portfolio and assets. As such, liquid assets are those that can easily be sold or traded. In personal finance, liquid assets are investments Liquid Assets Examples an individual may easily convert to cash without incurring fiscal penalties. The quick ratio is a calculation that measures a company’s ability to meet its short-term obligations with its most liquid assets.

What Are Non-Liquid Assets?

Cash in a bank account or credit union account can be accessed quickly and easily, via a bank transfer or an ATM withdrawal. Before you invest in illiquid assets, you should make sure that you understand the risks. You should also make sure that you have a plan for how you will sell the asset if you need to.

• There are now companies like CarMax and even car dealerships that will cut you a check within an hour of inspecting the vehicle.
• In financial accounting, the balance sheet breaks assets down by current and long-term with a hierarchical method in accordance to liquidity.
• Generally speaking, only taxable investment accounts are considered truly liquid.
• You can use silver or gold coins as currency in other states, meaning they can be as liquid as money.
• A company usually needs to keep a certain amount of liquid assets to meet short-term obligations.

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What is an example of a non-liquid asset?

Add liquid asset to one of your lists below, or create a new one. An act of exchanging a less liquid asset for a more liquid asset is called liquidation. We list essential finance and accounting KPIs to help your business achieve its goals. Funding for education can come from any combination of options and a J.P. Morgan Advisor can help you understand the benefits and disadvantages of each one. Compare between 529 Plans, custodial accounts, financial aid and other education options to help meet your goals. Easily research, trade and manage your investments online all conveniently on Chase.com and on the Chase Mobile app®.

• However, it’s also possible that you could sell the asset for more than what you originally invested.
• Consider the latest iPhone; any models being recorded as inventory may quickly be demanded by the market.
• These non-liquid assets can generate ample amounts of funds, but these are not readily saleable & are not made for selling in the normal course of business.
• If you start investing in these, you can see them grow within a few days.Precious MetalsPrecious metals can fall under illiquid or liquid assets.