what is the difference between a liquid asset and illiquid asset 
a liquid asset is an item of future economic benefit to a company that can easily be exchanged for cash on the other hand illiquid assets are more difficult to sell consider an office building in downtown new york compared to a single share of stock of amazon the office building may take months to find a buyer engage in negotiations draft legal documentation and finalize the deal on the other hand a single share of stock of publicly traded companies can usually be bought or sold online very quickly the bottom lineto measure how well a company will meet its short term debt obligations a company should be mindful of its liquid assets liquid assets are items that can be quickly converted to cash and companies earning tremendous profit may still face liquidity problems if they don t have the short term resources to pay bills 