Liquid asset

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Liquid capital or fluid capital is the part of a firm's assets that it holds as money.[1] It includes cash balances, bank deposits, and money market investments.

Financial reporting and liquidity analysis

In financial reporting, liquid capital is closely related to cash and cash equivalents. Under IAS 7, cash consists of cash on hand and demand deposits, while cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.[2] These assets are used in assessing a firm's ability to meet short-term cash requirements and are distinguished from less liquid assets such as inventories, fixed assets, or long-term investments.[3]

See also

References

  1. Laing, Graham Allen (1919). An Introduction to Economics. pp. 306–309.
  2. "IAS 7 Statement of Cash Flows". IFRS Foundation. Retrieved 10 June 2026.
  3. "17 CFR 229.303 – Management's discussion and analysis of financial condition and results of operations". Electronic Code of Federal Regulations. Retrieved 10 June 2026.