LIQUID FUNDS

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What Is a Liquid Funds ?

A liquid asset is an asset that can easily be converted into cash in a short amount of time. Liquid funds include things like cash, money market instruments, and marketable securities.

Both individuals and businesses can be concerned with tracking liquid funds as a portion of their net worth. For the purposes of financial accounting, a company’s liquid funds are reported on its balance sheet as current funds.

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A liquid asset is cash on hand or an asset that can be easily converted to cash. In terms of liquidity, cash is king since cash as legal tender is the ultimate goal. Funds can then be converted to cash in a short time are similar to cash itself because the asset holder can quickly and easily get cash in a transaction exchange.

Key Takeaways


  • A liquid asset is an asset that can easily be converted into cash within a short amount of time.

  • Liquid assets generally tend to have liquid markets with high levels of demand and security.

  • Businesses record liquid assets in the current assets portion of their balance sheet.

  • Business assets are usually broken out through the quick and current ratio methods to analyze liquidity types and solvency.