Liquid capital or fluid capital is the part of a firm's assets that it holds as money.[1] It includes cash balances, bank deposits, and money market investments.
Financial reporting and liquidity analysis
[edit]In financial reporting, liquid capital is closely related to cash and cash equivalents. Under IAS 7, cash consists of cash on hand and demand deposits, while cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to an insignificant risk of changes in value.[2] These assets are used in assessing a firm's ability to meet short-term cash requirements and are distinguished from less liquid assets such as inventories, fixed assets, or long-term investments.[3]
See also
[edit]References
[edit]- ↑ Laing, Graham Allen (1919). An Introduction to Economics. pp. 306–309.
- ↑ "IAS 7 Statement of Cash Flows". IFRS Foundation. Retrieved 10 June 2026.
- ↑ "17 CFR 229.303 – Management's discussion and analysis of financial condition and results of operations". Electronic Code of Federal Regulations. Retrieved 10 June 2026.
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