Intermediate Accounting (16th Edition)

Published by Wiley
ISBN 10: 1118743202
ISBN 13: 978-1-11874-320-1

Chapter 5 - Balance Sheet and Statement of Cash Flows - Review and Practice - Questions - Page 237: 6


Liquidity can be viewed to as the amount off time that is usually expected to elapse until an asset is converted into cash or until liability has been paid. The assets below can be ranked according to their liquidity as follows: 1. Short-term investments 2. Accounts receivable 3. inventory 4. Buildings 5. Goodwill

Work Step by Step

Basically, liquidity is highly associated with the conversion of any assets into quick cash and during the evaluation of investments, liquidity is highly considered.
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