'illiquid' or 'non-liquid' company

Heliss

Member
Bulgarian and English
Please tell me if the term 'illiquid company' is better than 'non-liquid'.

Non-liquid companies are unable to pay their taxes.

Illiquid companies are unable to pay their taxes.
 
  • Thomas Tompion

    Senior Member
    English - England
    Please tell me if the term 'illiquid company' is better than 'liquid'.

    Non-liquid companies are unable to pay their taxes.

    Illiquid companies are unable to pay their taxes.
    A liquid asset is one which can be easily and quickly converted into cash without loss.

    All the words in bold are imprecise when applied to companies, though the suggestion is that an illiquid company is in some way incapable of meeting its current debts - I don't think it's usually only referring to taxes.

    I don't think there's much difference between a non-liquid company and an illiquid one. If I had to use one of the adjectives, I'd use illiquid.
     

    cuchuflete

    Senior Member
    EEUU-inglés
    Perhaps U.S. and English or Southwest France accounting terminology is distinct, but where I am a liquid asset is one "which can be easily and quickly converted into cash", or it is cash already. The question of loss on conversion has nothing to do with liquidity.

    Example: I hold 100 common shares of Centipede Footware, whose equity is highly liquid on the Millinocket (Pop. ~ 5203) Stock Exchange. Currently the stock is trading in a range of $5.17 to $5.23 per share. After brokerage charges I can convert those shares to approximately $500. The cost of the shares has no bearing on their liquidity. I carry them on my balance sheet at current market value.

    To the original question: Is one of these "better than" the other?


    Non-liquid companies are unable to pay their taxes.

    Illiquid companies are unable to pay their taxes.

    No, they have equivalent meanings. I too would use illiquid if I had to choose one.
    I would not use either if I had the choice, and could refer to companies lacking liquidity.
    The proposed sentences are not wrong; they use terminology that sounds uncommon to me, an AE speaker.
     

    Thomas Tompion

    Senior Member
    English - England
    Perhaps U.S. and English or Southwest France accounting terminology is distinct, but where I am a liquid asset is one "which can be easily and quickly converted into cash", or it is cash already. The question of loss on conversion has nothing to do with liquidity.
    [...]
    I regard this as quite a common error, Cuchu. Maybe you could sell your house to your neighbour, 'quickly and easily', for $100. That fact alone would not make it a liquid asset. The condition that the conversion should be without loss, is surely necessary. It is standard in all the definitions of liquidity I have seen, in serious writers.
     
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