Liquid Assets

Liquid assets are resources that can be converted into cash rapidly and with minimal loss in value. They serve as an immediate source of funds for meeting short-term obligations, addressing unexpected expenses, or supporting routine financial operations. Examples often include currency, bank balances, short-term treasury instruments, and shares that can be sold easily in active markets.

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For instance, if a business holds ₹5 lakh in cash, ₹10 lakh invested in short-term government securities, and ₹15 lakh in office equipment, only the cash and the government securities would be considered liquid. The equipment is not regarded as liquid because selling it may take time and might not yield its full value right away.