Arrange the following current assets, in order of liquidity.

(A) Cash in hand

(B) Bills receivable

(C) Marketable securities

(D) Finished goods inventory

Choose the correct answer from the options given below:

(A), (C), (B), (D)

The correct answer is option 2- (A), (C), (B), (D).

(A) Cash in hand- Cash in hand refers to the physical cash that a business or individual holds and is immediately available for use. It is the most liquid asset, immediate cash.

(C) Marketable securities- Marketable securities are short-term investments that can easily be converted into cash, usually within a year. These include stocks, bonds, or treasury bills that are actively traded on financial markets. It is very liquid; easily converted to cash in the short term.

(B) Bills receivable- Bills receivable are written promises (usually called bills of exchange) from customers or debtors to pay a specific sum on a certain future date. These are assets for the business because money is expected to be received. Short-term receivables are less liquid than marketable securities.

(D) Finished goods inventory- This refers to products that have been manufactured and are ready for sale but haven’t been sold yet. These are part of a company’s inventory. It is the least liquid among these; needs to be sold before converting to cash.

Apart from the investment in fixed assets every business organisation needs to invest in current assets. This investment facilitates smooth day-to-day operations of the business. Current assets are usually more liquid but contribute less to the profits than fixed assets. Examples of current assets, in order of their liquidity, are as under.

1. Cash in hand/Cash at Bank
2. Marketable securities
3. Bills receivable
4. Debtors
5. Finished goods inventory
6. Work in progress
7. Raw materials
8. Prepaid expenses