Liquid Assets

Assets which are quickly converted into cash are called liquid assets. All current assets are liquid assets except inventory and prepaid expenses. Liquid Assets = Current Assets – inventory – Prepaid Expenses

An asset that can be converted into money quickly and with minimal impact to the price received. assets are usually regarded in the same light as money because their costs area unit relatively stable when they area unit sold  on the open market.


For an quality to be liquid it needs an established market with enough participants to soak up the selling without materially impacting the value of the asset. There also has to be a relative ease within the transfer of possession and also the movement of the asset. liquid assets embody most stocks, money market instruments and government bonds. The exchange market is deemed to be the foremost liquid market within the world because trillions of dollars exchange hands daily, making it not possible for any one individual to influence the rate of exchange.