Question on liquidity

geek84

Hi folks

I hope you're all fine and enjoying your studies!

Could you be kind enough to help me with this -

How would I answer a question if asked -

Put the following assets/liabilities in order of the ability to turn into liquid? (assuming that a list is given!)

Thanks in advance.

Steve Collings

This is sometimes termed the 'order of liquidity' - the hardest to turn into cash is at the top whilst the most liquid/cash is at the bottom of the list. It's normally associated with assets.

Regards

Steve

uknitty

I would give the following answer. Not saying its the right one though

From Least to most:

Intangiable Non Current Assets

Tangiable Non Current Assets

Inventories

Accounts Receivable

Cash and Cash Equivalents

Monsoon

Uknitty you won't get any arguments from me with that list, but thats my opinion not my actual knowledge!!

geek84

Hi uuknitty

Many thanks for your reply.

Can you be kind enough to give examples of tangible and non tangible non current assets?

Thanks

uknitty

As intangiable asset is something that has value but no physical presence - for example goodwill.

Tangiable assets are those which are physically real. This includes all property, plant and equipment. Bank accounts are tangiable assets because they represent actual monetary funds.

Does that make sense ?

geek84

Many thanks uknitty