posted on 06-06-2019 Liquid Asset Updated October 1, 2019 What is a Liquid Asset? A liquid asset is cash or securities that can be converted to cash quickly. How Does a Liquid Asset Work? Let's assume Company XYZ has $1 million of cash on its balance sheet and $300,000 of marketable securities. We could say Company XYZ has $1.3 million of liquid assets. Why Does a Liquid Asset Matter? Clearly, having the cash in hand to pay off debts is an advantage to borrowers and soothing to lenders. Thus, analysts compare liquid assets to current liabilities as a very stringent test of how well a company can meet its debt obligations. Read This Next 5 Credit Cards That Will Pay You Hundreds Just For Signing Up (2020) What's even better than earning rewards for spending on your credit cards? Getting paid hundreds of ... The Top 4 Balance Transfer Credit Cards for 2020 Tired of dragging credit card debt around with you? Taking 15 minutes to transfer your debt to a cre... The 5 Best Rewards Credit Cards for 2020 If you're going to spend money anyway, then why not get paid for it? Whether you're looking for c... Related Definitions Cash Cash is an asset that is in currency form. See More Off Balance Sheet Off balance sheet refers to items that are effectively assets or liabilities of a company but do not appear on the company's balance sheet. See More Marketable Securities Marketable securities are securities or debts that are to be sold or redeemed within a year. These are financial instruments that can be easily converted to... See More Debt In the business world, debt is an amount borrowed. See More Lender A lender is a creditor or any entity to which you owe money for services provided. See More Analyst An analyst gathers and interprets data about securities, companies, corporate strategies, economies or financial markets. Analysts are sometimes called... See More Current Liability A current liability is a liability due in less than one year. See More Debt In the business world, debt is an amount borrowed. See More Popular Articles Investing Financial Statement Analysis for Beginners Investing 15 Financial Ratios Every Investor Should Use Investing Calculating Internal Rate of Return Using Excel or a Financial Calculator Personal Finance 5 Common Sense Lotto Realities Everyone Ignores Loans How to Calculate a Monthly Loan Payment in Excel (Mortgage, Car Loan, and More) Popular Calculators Loans Calculator Loan Interest Calculator: How Much Interest Will I Pay My Lender? Investing Calculator Simple Savings Calculator: How Much Could I Save Up Over Time? Investing Calculator Million Dollar Savings Calculator: How Much Do I Need To Save to Become a Millionaire? Loans Calculator Car Loan Calculator: What Will My Monthly Principal & Interest Payment Be? Mortgage Calculator Mortgage Calculator: What Will My Monthly Principal & Interest Payment Be?