Quick assets

Definition

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:

1. Cash: This is the most liquid asset, representing physical currency and funds held in bank accounts.
2. Cash equivalents: These are highly liquid investments that are easily convertible to known amounts of cash and have a short maturity period
3. 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: R50,000
• Marketable securities: R30,000
• Accounts receivable: R20,000
• Inventory: R40,000
• Prepaid expenses: R10,000

To calculate the quick assets, we exclude inventory and prepaid expenses since they are not easily convertible into cash:

Quick assets = R50,000 + R30,000 + R20,000 = R100,000

In this example, Company XYZ’s quick assets total R100,000, which represents the amount of assets that can be quickly converted into cash to meet short-term obligations or unexpected expenses.