If a company has limited liquid assets, and more amounts stuck in accounts receivable or inventory, it may face a liquidity crunch to meet its immediate financial obligations and working capital requirements. This determines your assets available to invest in a franchise opportunity or business. Liquid assets are the most basic type of asset, used by consumers and businesses alike. Working Capital is the difference between your current assets, including cash or any items that can be converted to cash and your liabilities, which can include current bills needing payment. It defines a company's assets as all of its cash or cash-like property. ; Considering such an asset’s significant trading volume, some equitable securities might fast be transformed into cash. Examples of liquid assets are: cash itself, money in a savings account and investments such as stocks, bonds, mutual funds or money market funds. The stock market is believed to be the perfect example of any liquid market as there exist vast numbers of sellers and buyers, coupled with several other stocks being examples of liquid assets. The liquid capital is used to pay for costs such as, the franchise fee, deposits for utilities, first and last months lease, construction build-out, equipment leasing down payments and various other fees associated with getting a business started. Examples Example # 1. A liquid asset is cash on hand or an asset other than cash that can be quickly converted into cash at a reasonable price. Q2 : What is required liquid capital? Liquid assets include cash and other assets that can quickly be turned into cash without losing value. A: Required liquid capital is the minimum amount of liquid capital that a licensed corporation must have in order to comply with the financial resources requirement under the rules. Asset liquidity is one of those financial terms that sounds a lot more complicated than it actually is. Liquid assets are the backbone of any business unit, be it a small firm, or a big multinational corporation. Liquid, or Current, Working Capital Current working capital is the most common measure of working capital. To calculate your liquid capital add together your personal savings, money you have available from your friends, family, partners and investors and any other sources you may have. Liquid assets are those assets the owner, whether an individual or entity, can turn into cash quickly during a financial emergency. Cash on hand is considered a liquid asset due to its ability to be readily accessed. Section reference: 2. In other words, a liquid asset can be quickly sold on the market without a significant loss of its value. Working Capital. Loans, non-cash assets (like property or houses) do not apply. It is the amount by which a licensed corporation’s liquid assets exceeds its ranking liabilities. A liquid asset is an asset that can easily be converted into cash without a negative impact on its value. It’s a concept worth learning about, especially if you’re in the market for a mortgage.. In simpler terms, it refers to the cash available that can cover regular expenses so you don’t have to worry about it regularly.