Why liquid asset matters to a first-time founder
Liquid assets help a young company cover payroll, tax and supplier bills without waiting for customers to pay or selling equipment at a discount. Tracking them separately from total assets gives founders a clearer view of how long the business can meet near-term obligations.
Examples of liquid asset
A company has ₦70 million in its bank account, ₦20 million in a money-market fund and machinery worth ₦100 million. The cash and readily saleable fund are liquid assets. The machinery may be valuable, but finding a buyer and completing a sale could take weeks.
Common misunderstanding
Liquid does not mean risk-free or guaranteed to keep its price. Public shares may be easy to sell but can fall in value, while a large holding may take time to dispose of without moving the market. Liquidity depends on the asset, market and circumstances.
When to use it
Use the term when preparing cash-flow forecasts, reviewing working capital or assessing whether the company can meet short-term debts. State which assets you count and how quickly they can realistically become usable cash. Do not assume every current asset is equally liquid.