 Hello, in this lecture, we will define liquid assets. According to fundamental accounting principles, while 22nd edition, the definition of liquid assets is resources such as cash that are easily converted into other assets or used to pay for goods, services or liabilities. When we're thinking about liquid assets, we're thinking about the idea of paying for goods and services or liabilities with those assets and how easy it would be to do that, how easily can we convert the asset that we have to something that can be expended for goods or services or pay off a liability. Oftentimes it's easy to think about that in terms of the relationship to cash. How close to cash is a particular asset, cash generally being the most liquid asset, the thing that we can use most readily to pay for goods and services and to pay off liabilities. For example, we can think of these liquid assets in terms of degrees of liquidity. Cash being the most liquid asset, that being something that we can generally spend for goods and services and pay off liabilities very easily. Other types of assets have other degrees of basically liquidity. We're thinking about accounts receivable as also usually being quite liquid, meaning it's going to be converted into cash in a relatively short period of time. We may even be able to trade the accounts receivable in terms of IOUs as well. Therefore, the fact that it can be used or should be used in a short period of time to buy goods and services and pay off liabilities would make accounts receivable relatively liquid as an asset as well. If we compare that to property, plants and equipment, something like a forklift, a building or land, then we think about these as less liquid, meaning that we can't really use the forklift to pay off a liability or to pay for goods and services. You may be thinking that we could get a loan against it or we could sell those items, but that takes a bit more time. That's not as easily doable as having cash as getting the accounts receivable turned over in a short amount of time. So, liquidity has to do with usage and notice there's always going to be that trade-off in terms of the liquid asset being something that we can expend really easily and the less liquid asset being something that we can't generally just spend in order to buy goods and services or pay off liabilities. However, being things that are very necessary for the business as well and we have to find that balance between the liquidity of our assets that we have on hand.