The analysis of liquidity management decisions by firms has recently been used as a tool to investigate the impact of financial constraints.Firms facing funding constraints need to accumulate more cash in order to protect themselves from the possibility of not being able to finance viable investment projects. This question is particularly relevant in the context of the current financial crisis. Thus, this article analyses the determinants of holding liquid assets (cash and deposits) by Portuguese companies based on annual accounting data for the period 1990-2012 from the Central Balance Sheet of the Banco de Portugal. The results show that the share of liquid assets in total assets is positively affected by current cash flows and its past volatility, which suggests that Portuguese companies are in fact subject to liquidity constraints. In addition, the results suggest that the need to accumulate funds as a protection against future shocks is more pronounced for smaller companies (especially small and micro enterprises).