Liquid assets refer to cash on hand, cash on bank deposit, and assets that can be quickly and easily converted to cash. The common liquid assets are stock, bonds, certificates of deposit, or shares.
Liquid assets are different from non-liquid assets, such as property, vehicles, or jewelry, which can take longer to sell and may lose value in the sale. Liquid assets are perceived as being the most basic type of asset available.
A company usually needs to keep a certain amount of liquid assets to meet short-term obligations. A company can measure its liquidity by comparing the amount of liquid assets with the amount of current liabilities.
[Last updated in July of 2020 by the Wex Definitions Team]