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Quick assets, also known as liquid assets or current liquid assets, refer to a company’s most readily convertible and easily marketable assets into cash within a short period, typically within one year or less.
What are quick assets?
They are a subset of current assets.
The main components of quick assets typically include:
- Cash: This is the most liquid asset, representing physical currency and funds held in bank accounts.
- Cash equivalents: These are highly liquid investments that are easily convertible to known amounts of cash and have a short maturity period
- Accounts receivable: These are amounts owed to a company by customers for products or services that have been delivered but not yet paid for.
Quick assets are essential in assessing a company’s liquidity and ability to meet its short-term obligations.
Example of quick assets
Company XYZ’s balance sheet shows the following assets:
- Cash: £50,000
- Marketable securities: £30,000
- Accounts receivable: £20,000
- Inventory: £40,000
- Prepaid expenses: £10,000
To calculate the quick assets, we exclude inventory and prepaid expenses since they are not easily convertible into cash:
Quick assets = £50,000 + £30,000 + £20,000 = £100,000
In this example, Company XYZ’s quick assets total £100,000, which represents the amount of assets that can be quickly converted into cash to meet short-term obligations or unexpected expenses.
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