Definition of Illiquid:
Illiquid refers to the state of a stock, bond, or other assets that cannot easily and readily be sold or exchanged for cash without a substantial loss in value. Illiquid assets may be hard to sell quickly because there is low trading activity or interest in the issue, indicated by a lack of ready and willing investors or speculators to purchase or sell the asset. As a result, illiquid assets tend to have lower trading volume, wider bid-ask spreads, and greater price volatility.
Illiquidity is the opposite of liquidity.
Firm without enough cash to meet its current needs and obligations. Illiquidity is one of the major causes of business failure because a firm can survive without profit for a while but not without cash. Even firms rich in fixed assets (land, buildings, machinery) become insolvent from want of cash because it takes time to convert these assets into cash, and that too usually at a loss in value.
How to use Illiquid in a sentence?
- Due to our recent failures which caused this illiquid state we are currently in, Im afraid that were going to have to declare bankruptcy gentlemen.
- Illiquidity occurs when a security or other asset that cannot easily and quickly be sold or exchanged for cash without a substantial loss in value.
- While technically profitable, the company was forced into bankruptcy as the rate of revenue collections outpaced its collections leaving it illiquid .
- Illiquid assets tend to have wider bid-ask spreads, greater volatility and, as a result, higher risk for investors.
- The company wished to dissolve some of its property holdings for cash to pay its debts, as it had become illiquid .
- Illiquid assets may be hard to sell quickly because of a lack of ready and willing investors or speculators to purchase the asset, whereas actively traded securities will tend to be more liquid.
Meaning of Illiquid & Illiquid Definition