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Financial Terms | |
Liquid asset |
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Definition of Liquid assetLiquid assetasset that is easily and cheaply turned into cash - notably cash itself and short-term securities.
Related Terms:Money supplyM1-A: Currency plus demand deposits Quick RatioThe simple ratio of a company's liquid assets to current liabilities. Such assets include cash, marketable securities, and accounts receivable. Short-term solvency ratiosRatios used to judge the adequacy of liquid assets for meeting short-term WillThis is a legal document detailing how you want your assets to be distributed upon your death. You may also stipulate how you wish to be buried or who you would like to take care of any surviving dependent family members. In my opinion, it is very important to be quite specific about your wishes for the distribution of special assets such as the antique grandfather clock, the classic silver tea set or the antique piano. If you think that your beneficiaries may dispute how your things are to be distributed, consider stipulating that an auction be held in which all beneficiaries may bid on the item which they value and all moneys collected are then shared in the same manner in which you distributed your other liquid assets. Your might want to remember that a will is automatically revoked upon marriage unless the will specifically states that the will is made in contemplation of marriage. Accounting liquidityThe ease and quickness with which assets can be converted to cash. Acquisition of assetsA merger or consolidation in which an acquirer purchases the selling firm's assets. AssetAny possession that has value in an exchange. ![]() AssetA resource, recorded through a transaction, that is expected to yield a benefit to a AssetSomething that is owned; a financial claim or a piece of property that is a store of value. AssetProbable future economic benefit that is obtained or controlled by an entity as a result of assetAnything owned by, or owed to, an individual or business which has commercial or exchange value (e.g., cash, property, etc.). AssetAll things of value owned by an individual or organization. Asset activity ratiosRatios that measure how effectively the firm is managing its assets. Asset allocation decisionThe decision regarding how an institution's funds should be distributed among the Asset-Backed SecuritiesBond or note secured by assets of company. Asset-backed securityA security that is collateralized by loans, leases, receivables, or installment contracts ![]() Asset-based financingMethods of financing in which lenders and equity investors look principally to the Asset-Based FinancingLoans granted usually by a financial institution where the asset being financed constitutes the sole security given to the lender. Asset classesCategories of assets, such as stocks, bonds, real estate and foreign securities. Asset CoverageExtent to which a company's net assets cover a particular debt obligation, class of preferred stock, or equity position. Asset-coverage testA bond indenture restriction that permits additional borrowing on if the ratio of assets to Asset/equity ratioThe ratio of total assets to stockholder equity. Asset for asset swapCreditors exchange the debt of one defaulting borrower for the debt of another Asset/liability managementAlso called surplus management, the task of managing funds of a financial asset mixThe weighting of assets in an investment portfolio among different asset classes (e.g. shares, bonds, property, cash, overseas investments. Asset pricing modelA model for determining the required rate of return on an asset. Asset pricing modelA model, such as the Capital asset Pricing Model (CAPM), that determines the required ![]() Asset-specific RiskThe amount of total risk that can be eliminated by diversification by Asset substitutionA firm's investing in assets that are riskier than those that the debtholders expected. Asset substitution problemArises when the stockholders substitute riskier assets for the firm's existing Asset swapAn interest rate swap used to alter the cash flow characteristics of an institution's assets so as to Asset turnoverThe ratio of net sales to total assets. asset turnovera ratio measuring asset productivity and showing the number of sales dollars generated by each dollar of assets asset turnover ratioA broad-gauge ratio computed by dividing annual AssetsA firm's productive resources. ASSETSAnything of value that a company owns. AssetsThings that the business owns. AssetsItems owned by the company or expenses that have been paid for but have not been used up. Assets requirementsA common element of a financial plan that describes projected capital spending and the capital assetan asset used to generate revenues or cost savings Capital assetA fixed asset, something that is expected to have long-term usage within Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and Capital Asset Pricing Model (CAPM)A model for estimating equilibrium rates of return and values of capital asset pricing model (CAPM)Theory of the relationship between risk and return which states that the expected risk Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized againstfuture-period revenue. Contra-asset accountAn offset to an asset account that reduces the balance of the asset account. Current assetTypically the cash, accounts receivable, and inventory accounts on the Current assetsValue of cash, accounts receivable, inventories, marketable securities and other assets that Current assetsCash, things that will be converted into cash within a year (such as accounts receivable), and inventory. Current assetsAmounts receivable by the business within a period of 12 months, including bank, debtors, inventory and prepayments. current assetsCurrent refers to cash and those assets that will be turned Current AssetsCash and other company assets that can be readily turned into cash within one year. Deferred Tax AssetFuture tax benefit that results from (1) the origination of a temporary difference Dynamic asset allocationAn asset allocation strategy in which the asset mix is mechanistically shifted in Exchange of assetsAcquisition of another company by purchase of its assets in exchange for cash or stock. Financial assetsClaims on real assets. financial assetsClaims to the income generated by real assets. Also called securities. Fixed assetLong-lived property owned by a firm that is used by a firm in the production of its income. Fixed assetAn item with a longevity greater than one year, and which exceeds a company’s Fixed asset turnover ratioThe ratio of sales to fixed assets. Fixed assetsThings that the business owns and are part of the business infrastructure – fixed assets may be fixed assetsAn informal term that refers to the variety of long-term operating Fixed AssetsLand, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation. Fixed Assets Turnover RatioA measure of the utilization of a company's fixed assets to Intangible assetA legal claim to some future benefit, typically a claim to future cash. Goodwill, intellectual Intangible assetA nonphysical asset with a life greater than one year. Examples are Intangible assetsassets owned by the company that do not possess physical substance; they usually take the form of rights and privileges such as patents, copyrights, and franchises. Intangible fixed assetsNon-physical assets, e.g. customer goodwill or intellectual property (patents and trademarks). Involuntary liquidation preferenceA premium that must be paid to preferred or preference stockholders if LIFO LiquidationA reduction in the physical quantity of an inventory that is accounted for Limitation on asset dispositionsA bond covenant that restricts in some way a firm's ability to sell major assets. Liquid yield option note (LYON)Zero-coupon, callable, putable, convertible bond invented by Merrill Liquid yield option note (LYON)Zero-coupon, callable, putable, convertible bond invented by Merrill Lynch & Co. Liquidating dividendPayment by a firm to its owners from capital rather than from earnings. LiquidationWhen a firm's business is terminated, assets are sold, proceeds pay creditors and any leftovers LiquidationThe process of selling off all the assets of a business entity, settling its liabilities, liquidationSale of bankrupt firm’s assets. Liquidation rightsThe rights of a firm's securityholders in the event the firm liquidates. Liquidation valueNet amount that could be realized by selling the assets of a firm after paying the debt. Liquidation ValueThe net proceeds (after taxes and expenses) of selling the assets liquidation valueNet proceeds that would be realized by selling the firm’s assets and paying off its creditors. LiquidatorPerson appointed by unsecured creditors in the United Kingdom to oversee the sale of an LiquidityA market is liquid when it has a high level of trading activity, allowing buying and selling with LiquidityA measure of the ability of a business to pay its debts as they fall due – see also working capital. LiquidityA term that means nearness to cash; the closer an asset is to becoming cash or a liability is to using cash, the more liquid that asset or liability is. LiquidityThe ease with which assets or securities can be sold for cash on liquidityAbility of an asset to be converted to cash quickly at low cost. LiquidityEase with which an asset can be sold on short notice at a fair price. LiquidityThe degree to which an asset can be cheaply and quickly turned into money. Liquidity CrisisSituation in which a firm is unable to meet due bills; a period of "technical insolvency". Liquidity diversificationInvesting in a variety of maturities to reduce the price risk to which holding long Liquidity preference hypothesisThe argument that greater liquidity is valuable, all else equal. Also, the Liquidity premiumForward rate minus expected future short-term interest rate. Liquidity ratiosRatios that measure a firm's ability to meet its short-term financial obligations on time. Liquidity ratiosRatios that measure a firm's ability to meet its short-term financial obligations on time. Liquidity riskThe risk that arises from the difficulty of selling an asset. It can be thought of as the difference Liquidity theory of the term structureA biased expectations theory that asserts that the implied forward Long-term assetsValue of property, equipment and other capital assets minus the depreciation. This is an Longer-Term Fixed Assetsassets having a useful life greater than one year but the duration of the 'long term' will vary with the context in which the term is applied. 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