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Accounts Receivable and Inventory Are Some of the Most Liquid

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Accounts receivable and inventory are some of the most liquid assets a firm owns and their market value is typically fairly close to book value. Even so, in the eyes of many lenders, these assets make for inadequate collateral on loans, particularly if the business looking to borrow the money is in a liquidity crisis. Why do you think this is the case?


Definitions:

Adolescents

Young people going through the phase of development from childhood to adult life, focusing on physical, psychological, and social changes.

Ethnic Identity

A sense of belonging to an ethnic group.

Foreclosure Status

A term used by James Marcia to describe an identity status where an individual has committed to an identity without exploring options.

James Marcia

A developmental psychologist noted for his work on adolescent identity formation and his theory of identity statuses.

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