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Simple English definitions for legal terms
net quick assets
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A quick definition of net quick assets:
Net Quick Assets: This is a term used to describe the amount of money a company has left over after subtracting its liabilities from its quick assets. Quick assets are assets that can be easily converted into cash, such as cash itself, accounts receivable, and inventory. The net quick assets are important because they show how much money a company has available to pay off its debts quickly.
A more thorough explanation:
Definition: Net quick assets refer to the difference between a company's quick assets (assets that can be easily converted into cash) and its current liabilities. It is a measure of a company's ability to pay off its short-term debts using its most liquid assets.
Example: If a company has $100,000 in quick assets (such as cash, marketable securities, and accounts receivable) and $50,000 in current liabilities (such as accounts payable and short-term loans), its net quick assets would be $50,000 ($100,000 - $50,000).
Explanation: The example illustrates how net quick assets are calculated by subtracting current liabilities from quick assets. In this case, the company has enough liquid assets to cover its short-term debts with $50,000 left over. This indicates that the company is in a good financial position and has the ability to meet its obligations in the short term.