1. The property of assets, of being easily turned into money rapidly and at a fairly predictable price. Apart from money itself, and deposits with non-bank financial firms such as building societies, short-dated securities such as Treasury bills are the main assets of this form. This can be contrasted to illiquidity. Some assets are illiquid because there are no markets on which they can easily be traded: for example, unsecured loans to bank customers. Other assets are illiquid because while they can be traded, the price that can be obtained may be hard to predict, especially if a quick sale is required. This applies to shares in companies, or to houses.

2. The property of having liquid assets. Without these a business may have problems over meeting its obligations because, although it believes itself to be solvent, this view is not shared by credit institutions. The information which leads it to feel solvent, for example confidence in new products, may be private and not convincing to creditors.