Liquid assets are items with financial value which can be quickly transformed into cash or are already cash. Financial experts define liquid assets to be assets that can be transformed into cash in a span of twenty days or less and which can be sold at a value that is at least equal to the market value of the property. The last part of the definition is particularly important because it describes what an asset really ought to be – assets should not make you lose money in the end. Examples of liquid assets include cash, funds in the bank, stocks, and bonds.

The liquidity of a resource can be assessed by how easy or how difficult it is to buy and sell. Liquid market investments such as stock investments are more liquid compared to real estate investments. Remember though that real estate has the potential of being a liquid asset if it can be paid in full in less than twenty days. That being said, it means that an item is considered non-liquid when it is paid on an installment basis.

Money is, without a doubt, the best example of liquid asset because of the relative ease at which it can be bought or sold based on market value. Money, whether in the form coins, paper bills, or debit cards, are considered liquid assets because it can be used to settle bills and likewise purchase  goods and services in no time. Cash deposits in the bank is yet another common example of liquid asset. These are considered as liquid assets because account holders can quickly get some cash when there’s a need to do so. As pointed out previously, stocks are perceived as liquid assets due to the fact that they can be turned into cash quickly. Stock exchanges allows the trading, buying, and selling of stocks within acceptable prices. Bonds are yet another example of liquid assets because in a sense, borrowing money is a fast way to obtain cash.

In order to have a successful company, one must have a healthy balance of liquid assets. Investors will shell out more and creditors will lend more if they know that a business has enough liquid assets to fulfill its financial obligations.