Month End Glossary

Marketable Securities

Marketable securities are financial instruments that can be quickly converted into cash and are generally traded on public stock or bond markets.

Marketable securities represent a category of liquid assets similar to cash because they can be easily and promptly converted into cash. Examples of marketable securities include stocks, bonds, and treasury bills. These financial instruments are characterized by being traded on established and reliable markets, ensuring their liquidity and transparent pricing.

For instance, a company may hold marketable securities as part of their cash management strategy to balance liquidity with short-term investment returns. These securities are distinct from other investments because of their high liquidity and short-term nature. Holding high-quality, marketable securities can also aid companies in managing their working capital effectively.

In accounting, marketable securities are often recorded on the balance sheet under short-term assets.

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