Topic summary
Liquid asset
Extracted from the Wikipedia article Liquid capital.
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. 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.