Liquidity
How quickly and easily an asset can be converted to cash without losing value.
What does liquidity mean?
Cash is the most liquid asset; real estate and collectibles are among the least. Adequate liquidity — for individuals, an emergency fund; for businesses, working capital — prevents being forced to sell assets at a bad time.
Put it to use
Emergency Savings Calculator This calculator helps you determine how much emergency savings you may need, and how you can begin saving toward this important goal. Financial Ratios Calculator This calculator helps you to zero in on areas of your business that may need attention. Areas such as solvency, liquidity, operational efficiency and profitability.
Related terms
Liquidity — frequently asked
What does liquidity mean for my finances?
Liquidity is how quickly an asset can become spendable cash without losing value. Cash and savings are highly liquid; a home or retirement account is not. Keeping enough liquid money lets you handle emergencies without selling at a loss.
Which assets are the most liquid?
Cash and checking or savings balances are most liquid, followed by money-market funds and marketable stocks. Real estate, private businesses and collectibles are least liquid, since selling them takes time and often a price concession.