Quick Assets
What are Quick Assets?
Quick assets, also known as liquid assets or liquid current assets, include cash, cash equivalents, marketable securities, and accounts receivable. These assets are highly liquid and readily convertible into cash to meet short-term financial obligations or capitalize on immediate opportunities.
Quick Assets Examples:
Examples of quick assets include:
- Cash on hand and in bank accounts
- Short-term investments (Marketable securities or treasury bills)
- Accounts receivable (net of allowances for doubtful accounts)
- Marketable inventory or readily marketable raw materials
How to Calculate Quick Assets- Formula
The formula to calculate quick assets is straightforward:
Quick Assets = Cash + Cash Equivalents + Marketable Securities + Accounts Receivable
How to Find Quick Assets
To determine quick assets:
- Refer to the company's balance sheet: Quick assets are typically listed under current assets.
- Identify the components: Locate cash, cash equivalents, marketable securities, and accounts receivable.
- Sum up the values: Add up the values of these components to calculate the total quick assets.
Difference Between Current Assets and Quick Assets
While both current assets and quick assets represent a company's short-term resources, there are key differences between them:
Current assets include all assets expected to be converted into cash or consumed within one year, while quick assets are a subset of current assets consisting only of the most liquid assets.
Quick assets exclude certain current assets such as inventory, prepaid expenses, and other less liquid assets that may take longer to convert into cash.
Quick assets provide a more conservative measure of a company's liquidity compared to total current assets, as they exclude assets with potentially lower liquidity or marketability.
