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Jun 27, 2024 · A liquid asset is an asset that can easily be converted into cash within a short amount of time. ... This broadens the scope of liquid assets to include accounts receivable and inventory.
- Cash. Includes physical money (local and foreign currency) as well as the savings account and/or current account balances.
- Cash equivalents. Cash equivalents are investment securities with a maturity period not exceeding a year. Examples include treasury bills, treasury bonds, certificates of deposit, and money market funds.
- Marketable securities. Stocks, bonds, and exchange traded funds (ETFs) are examples of marketable securities with a high degree of liquidity. They can be sold easily and it usually takes just a few days to receive the cash from their sale.
- Accounts receivable. Money owed to a business by its customers for goods and services provided makes up accounts receivable. The liquidity of accounts receivable varies.
Aug 8, 2024 · Accounts receivable (AR) is an item on a company's balance sheet that represents money due the company for products or services it has already delivered. Accounts receivable is considered an asset ...
Feb 25, 2023 · Liquidity vs. Liquid Assets: An Overview . ... The accounts receivable, or payments owed to the company, are part of the company's liquid assets for that period as well.
- Claire Boyte-White
Jul 13, 2023 · Therefore, inventory is considered less liquid compared to accounts receivable because it requires more time and effort to convert into cash. The simple answer to the question “What is more Liquid?” is that accounts receivable are generally considered to be more liquid than inventory. Let’s try to understand this with the help of an example.
Nearly every asset a company has is liquid to some degree, but some are more liquid than other. Merchandise inventory and accounts receivable are both considered "current assets," meaning that a ...
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Aug 19, 2022 · Solving the Accounts Receivable vs Cash Problem. So, to recap: cash is a vital element of any company. And while accounts receivable are technically considered cash, they are not as “liquid” as you may expect. To put it another way, you can’t always turn your accounts receivable into cash as fast as you’d like.
