Quick assets

What is Quick assets?

The quick asset is the number of assets on the balance sheet that can be converted into cash quickly and without incurring significant losses.

Quick assets are assets owned by a company that has a commercial or exchange value and can be easily converted to cash or are already in cash form. As a result, they are considered to be the most liquid assets held by a company. Cash and equivalents, marketable securities, and accounts receivable are examples. Companies use quick assets to calculate financial ratios used in decision-making, most notably the quick ratio.

Quick assets, as opposed to other types of assets, represent economic resources that can be converted into cash in a relatively short period of time without significant loss of value. It include the most liquid current asset items, such as cash and cash equivalents, as well as marketable securities and accounts receivable. It does not include inventories because they may take longer to convert into cash.

Analysts frequently use quick assets to assess a company’s ability to meet its immediate bills and obligations due within a year. The total amount of quick assets is used in the quick ratio, also known as the acid test, a financial ratio that divides a company’s cash and equivalents, marketable securities, and accounts receivable by its current liabilities. This ratio enables investment professionals to determine whether a company will be able to meet its financial obligations if its revenues or cash collections slow.