What does "liquid" mean in terms of finance/money

[PoPPeR]

My general impression of liquid was like, equivalent to cash, like in a liquidation everything is sold for cash. I've heard liquid used so many places but never had a clear definition explained to me (Ben Affleck in Boiler Room, "Best of all, i'm liquid", John Grisham in The Summons, "Lew the Liquidator", Wall Street with Charlie Sheen/Michael Douglas, liquidation of Blue Star Airlines, etc.)

Does anyone have like a dictionary definition of the term?

Edit: Well dictionary.com defines it as "readily available to turn into cash." In that sense, what does "6. Clear; definite in terms or amount.[Obs.] ``Though the debt should be entirely liquid.'' --Ayliffe" mean

 

[yobarman]

from what i remember from econ 1 it meant money that can be transferred or moved fast... i dunno im taking econII now so hopefully everything will come back to me

 

[Lonyo]

Dictionary definition

Readily convertible into cash: liquid assets.

 

[BaliBabyDoc]

yobarman is right. Converting all assets into a common, easily transferred form is liquidation/liquid.

 

[machintos]

Originally posted by: Lonyo
Dictionary definition

Readily convertible into cash: liquid assets.

What he said

 

[wfbberzerker]

"we're looking up money laundering in the dictionary!"

 

[jw791]

Yes, liquid means easily converted into cash.

Stocks, bonds, etc...that have a market and can be sold quickly are considered "liquid".

Other assets on the books like property, buildings, factrory equipment, etc... are not considered "liquid" because some effort needs to be made to convert to cash

 

[Zenmervolt]

Everyone is right about the dictionary definition of "liquid". However, it's worth noting that in Finance, cash itself is considered a liquid asset. If we were to rank some things in order of liquidity (most liquid first), we would get a list that was something like this:

Cash
Receivables
Stocks/Bonds
Land
Generalised Equipment
Buildings
Specialised Equipment

That's just off the top of my head though, actual liquidity is dependant on several factors (e.g. land is more liquid if the land is in a prime location during a real estate boom, equipment is less liquid if it can only be used for one specific job).

ZV <--Finance Major

 

[Ameesh]

basically its something that can easily be converted to cash.