Accounts Receivable and Inventory Are Some of the Most Liquid

question 50

Essay

Accounts receivable and inventory are some of the most liquid assets a firm owns and their market values are 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?

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Definitions:

Analysis

The process of examining components or structures critically to understand them better or identify relationships.

Effectiveness

The degree to which objectives are achieved and the extent to which targeted problems are solved.

Statistical Analyses

Statistical Analyses involve the collection, examination, interpretation, and presentation of data to discover underlying patterns and trends, and to make decisions based on statistical evidence.

Independent Observations

Observations made without influence from other variables, ensuring unbiased and accurate data collection.