What is considered liquid assets

Anything of financial value to a business or individual is considered an asset. Liquid assets, however, are the assets that can be easily, securely, and quickly exchanged for legal tender. Your inventory, accounts receivable, and stocks are examples of liquid assets — things you can quickly convert to hard cash.

Is a 401k considered a liquid asset?

401(k) accounts do not qualify as liquid assets until you reach retirement age. If you are not yet 59 ½, the IRS will require you to pay income tax on the 401(k) withdrawal, and an additional 10% early withdrawal penalty. The 10% penalty makes a 401(k) non-liquid.

Is a car a liquid asset?

A cash equivalent is an investment with a short-term maturity that can be quickly converted to cash, such as stocks, bonds, and mutual funds. Liquid assets differ from non-liquid assets, such as property, vehicles or jewelry, which can take longer to sell and therefore convert to cash, and may lose value in the sale.

What is excluded from liquid assets?

Stock is excluded from liquid assets because in calculation of liquid ration only those assets are considered which can be readily converted into cash within a period of 90 days. Stock cannot all the time be converted into cash immediately.