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Liquidity

Liquidity means that assets can be readily turned into cash i.e. liquidated readily. Non-liquidity is the reverse. In a real estate market downturn properties can be Non-liquid because it may be hard to realize their value. Works of art can also be non-liquid because they are often only bought and sold at certain times of the year through specific markets. Typically long term assets tend to be less liquid than short term assets but not always. Works in process are items of inventory which are part way along in a production process. They are normally short term current assets but will often be non-liquid if a manufacturing company ceases operating and needs to liquidate its assets.

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