2 min read
Definition
Illiquid describes an asset that cannot easily or quickly be turned into cash without losing value — specialist equipment, property, or slow-moving stock. A business can be asset-rich but illiquid, unable to pay its bills despite being worth a lot on paper.
In plain terms
You cannot pay wages with a warehouse or a machine. If most of a company's value is locked in assets it cannot readily sell, it may be solvent yet unable to meet immediate obligations — a common and dangerous position.
Why it matters
Illiquidity is why a profitable, valuable business can still fail: value on the balance sheet does not pay this week's bills. See liquidity.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.