Marketable Securities Là Gì

Will Kenton is an expert on the economy & investing laws và regulations. He previously held senior editorial roles at and Kapitall Wire and holds a MA in Economics from The New School for Social Retìm kiếm và Doctor of Philosophy in English literature from NYU." data-inline-tooltip="true">Will Kenton

Peggy James is a CPA with over 9 years of experience in accounting and finance, including corporate, nonprofit, và personal finance environments. She most recently worked at Duke University and is the owner of Peggy James, CPA, PLLC, serving small businesses, nonprofits, solopreneurs, freelancers, và individuals.

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What are Marketable Securities

Marketable securities are liquid financial instruments that can be quickly converted inlớn cash at a reasonable price. The liquidity of marketable securities comes from the fact that the maturities tend lớn be less than one year, & that the rates at which they can be bought or sold have sầu little effect on prices.

Marketable securities are assets that can be liquidated to lớn cash quickly. These short-term liquid securities can be bought or sold on a public stoông xã exchange or a public bond exchange.These securities tend lớn mature in a year or less and can be either debt or equity. Marketable securities include comtháng stochồng, Treasury bills, và money market instruments, aý muốn others.

Understanding Marketable Securities

Businesses typically hold cash in their reserves lớn prepare them for situations in which they may need to act swiftly, such as taking advantage of an acquisition opportunity that comes up or making contingent payments. However, instead of holding on lớn all the cash in its coffers which presents no opportunity to earn interest, a business will invest a portion of the cash in short-term liquid securities. This way, instead of having cash sit idly, the company can earn returns on it. If a sudden need for cash emerges, the company can easily liquidate these securities. Examples of a short-term investment products are a group of assets categorized as marketable securities.

Marketable securities are defined as any unrestricted financial instrument that can be bought or sold on a public stoông xã exchange or a public bond exchange. Therefore, marketable securities are classified as either marketable equity security or marketable debt security. Other requirements of marketable securities include having a strong secondary market that can facilitate quichồng buy and sell transactions, và having a secondary market that provides accurate price quotes for investors. The return on these types of securities is low, due khổng lồ the fact that marketable securities are highly liquid & are considered safe investments.

Examples of marketable securities include comtháng stoông xã, commercial paper, banker"s acceptances, Treasury bills, and other money market instruments.

Special Considerations

Marketable securities are evaluated by analysts when conducting liquidity ratio analysis on a company or sector. Liquidity ratios measure a company"s ability to lớn meet its short-term financial obligations as they come due. In other words, this ratio assesses whether a company can pay its short-term debts using its most liquid assets. Liquidity ratquả táo include:

Cash Ratio

CashRatio=MCSCurrentLiabilitieswhere:MCS=MarketValueofCashandMarketableSecuritieseginaligned & extCash Ratio = frac extMCS extCurrent Liabilities \ & extbfwhere: \ & extMCS = extMarket Value of Cash & Marketable Securities \ endaligned​CashRatio=CurrentLiabilitiesMCS​where:MCS=MarketValueofCashandMarketableSecurities​

The cash ratio is calculated as the sum of the market value of cash and marketable securities divided by a company"s current liabilities. Creditors prefer a ratio above 1 since this means that a firm will be able to lớn cover all its short-term debt if they came due now. However, most companies have a low cash ratio since holding too much cash or investing heavily in marketable securities is not a highly profitable strategy.

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Current Ratio

CurrentRatio=CurrentAssetsCurrentLiabilitieseginaligned & extCurrent Ratio = frac extCurrent Assets extCurrent Liabilities \ endaligned​CurrentRatio=CurrentLiabilitiesCurrentAssets​​

The current ratio measures a company"s ability lớn pay off its short-term debts using all its current assets, which includes marketable securities. It is calculated by dividing current assets by current liabilities.

Quichồng Ratio

QuickRatio=QuickAssetsCurrentLiabilitieseginaligned & extQuick Ratio = frac extQuichồng Assets extCurrent Liabilities \ endaligned​QuickRatio=CurrentLiabilitiesQuickAssets​​

The quiông chồng ratio factors in only quick assets into its evaluation of how liquid a company is. Quiông chồng assets are defined as securities that can be more easily converted into cash than current assets. Marketable securities are considered quiông xã assets. The formula for the quick ratio is quichồng assets / current liabilities.

Types of Marketable Securities

Equity Securities

Marketable equity securities can be either comtháng stoông xã or preferred stochồng. They are equity securities of a public company held by another corporation & are listed in the balance sheet of the holding company. If the stock is expected to lớn be liquidated or traded within one year, the holding company will danh sách it as a current asmix. Conversely, if the company expects khổng lồ hold the stoông chồng for longer than one year, it will list the equity as a non-current asphối. All marketable equity securities, both current và non-current, are listed at the lower value of cost or market.

If, however, a company invests in another company"s equity in order to acquire or control that company, the securities aren"t considered marketable equity securities. The company instead lists them as a long-term investment on its balance sheet.

Debt Securities

Marketable debt securities are considered khổng lồ be any short-term bond issued by a public company held by another company. Marketable debt securities are normally held by a company in lieu of cash, so it"s even more important that there is an established secondary market. All marketable debt securities are held at cost on a company"s balance sheet as a current asmix until a gain or loss is realized upon the sale of the debt instrument.

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Marketable debt securities are held as short-term investments and are expected to be sold within one year. If a debt security is expected khổng lồ be held for longer than one year, it should be classified as a long-term investment on the company's balance sheet.