Question

Which is the least liquid of the firm’s current assets

Answer 1

Current assets are the assets which can be converted into cash within a year. Examples of current assets are inventories, debtors, cash and bank balance, marketable securities, prepaid assets.

From all of them inventories are the least liquid current asset. Inventories can be in form of raw material, work in progress, finished goods.

Inventories may or may not converted into sales in current year and may be carried forward as closing stock to next year. Hence inventories are the least liquid asset.

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