Which of the following balance sheet items generally takes the longest time to convert to cash?

marketable securities
accounts payable
inventory
accounts receivable

Expert Solution

The highest source of liquidity are cash, marketable securities, such as stocks or bonds; and account receivable. Whereas inventory is not regarded as a ready source of liquidity. In order to convert inventory in to cash, we need to search a customer then selling the inventory and then waiting for payments in case of credit sales. Damaged or obsolete inventory may not be sold at all, so inventory takes longer time to convert in to cash.

Hence option “Inventory” is correct answer.

jeff jeffy answered 2 years ago

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