What are Quick Assets?

Quick assets are any type of assets that are either already in the form of cash, or can be converted into cash in a short period of time. There are many different types of assets that meet this basic criteria. Having at least some amount of assets that can be used for cash purposes now or in the near future is essential to just about any economic situation, from the household budget to the operating budget of a multinational corporation.

The benefit of quick assets is that they can be utilized to settle necessary expenses, with little to no waiting required. Along with serving as the means to manage everyday debt obligations, these types of assets can also be called upon in an emergency situation. For example, if an individual is suddenly faced with unemployment, the assets can be sold and the cash earned from the sale can be used as income while that individual seeks new employment.

In terms of quick assets that are often common for individuals and their household budgets, bank accounts with active balances are the most common example. Funds contained in a checking or savings account that can be used for cash purposes at any time are essential to maintaining a balanced home budget. Along with assets that are already in cash form, personal assets such as jewelry that can be sold quickly on the open market would also be classified as quick assets.

For businesses, several different assets are normally considered quick. This would include any type of inventory that the company current maintains. Corporate quick assets of this type would include finished goods inventories as well as raw material inventories, since both those assets could presumably be sold at fair market values and generate cash in a short period of time. In most nations, any balances currently included in the accounts receivables are also classified as quick assets, since the expectation is that customers with outstanding invoices will pay off those balances within three calendar months after receiving those invoices.

One example of quick assets that applies to individuals as well as businesses is stock options. Any shares of stock that have the potential to be traded on an exchange or in a similar setting, and are likely to generate cash in a short period of time, can right be referred to as a quick asset. Investors may sell the shares as part of round lots, which total a minimum of one hundred shares, or as odd lots, which contain less than one hundred shares.