Liquid Assets

Liquid assets are assets that the owners can convert into cash quickly and cost-effectively.

The “most liquid asset” is cash (cash on hand, on bank accounts, short-term deposits). Other liquid assets are current assets, such as short-term financial investments (for example, securities listed on the stock exchange, which the owners can sell any time). The economists consider these assets, cash and short-term financial investments the “most liquid assets”.

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The short-term accounts receivable (A/R) don’t relate to the “highly liquid assets”. Still, the experts classify them as assets that are “more liquid” than stocks and other current assets.

In fact, in order to assess the liquidity of the accounts receivable, you need to look whether it’s possible to recover or sell them easily. A sign of a liquid asset is the availability of a free market where such assets are traded.

The least liquid of the current assets are the reserves (raw materials, materials, costs of the unfinished production).

Depression