As you put together the financial statements for your business, the accounting rules require that securities or assets owned by the business be classified as marketable or not readily marketable. Besides following the generally accepted accounting principles -- GAAP -- rules, the difference between the types of securities have an effect on the money available to run your business.

Marketable assets are securities or other products that are regularly traded and current prices can be obtained from market data or investment firms. Stocks and bonds listed on the stock exchanges or over-the-counter markets qualify as marketable securities.

Other assets, such as commodities that trade on the commodity futures exchange, would also fall under the marketable assets category. A marketable asset is one where frequently updated price quotations are available, and the asset could actually be sold at or near the quoted price. Not readily marketable applies to assets that are not regularly traded or where there are no updated price quotations. Thinly traded securities or privately held and securities would fall under this classification.

The value of not readily marketable assets may have to be estimated instead of getting a price quote. GAAP rules provide a significant amount of guidance concerning how not readily marketable assets should be listed on a company's financial statements.

Primary Market and Secondary Markets for United States Treasury Securities

The amount of marketable assets on the books of your business represent holdings that could readily be turned into cash for business purposes. For example, publicly-traded stock shares can be sold and the money available in a couple of days.

Although you may have purchased the assets to make money from value growth or income paid by the assets, the liquidity of marketable assets give you and your business flexibility. Not readily marketable assets may be good investments or holdings, but they do not provide the flexibility of assets that can be quickly turned into cash.

If you want to put an overall value on your business, the values placed on not-readily marketable assets can add some questions to the validity of the valuation.

The value on the financial statements of these assets may be significantly more or less than the amount realized if the assets were sold.

Marketable assets have firm values and the balance sheet number for these assets can be believed with a high degree of certainty. Tim Plaehn has been writing financial, investment and trading articles and blogs since His work has appeared online at Seeking Alpha, Marketwatch.

Marketable Security

Plaehn has a bachelor's degree in mathematics from the U. What Percentage Should Return on Assets Be for a Company?

Classification of Marketable and Non-Marketable Securities

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How to Show a Mortgage Loan on a Not for Profit Balance Sheet How Is a Balance Sheet Used to Determine the Value of a Business? List of Assets in a Business How Do Operating Activities Relate to the Balance Sheet? Marketable Assets Marketable assets are securities or other products that are regularly traded and current prices can be obtained from market data or investment firms.

Not Readily Marketable Not readily marketable applies to assets that are not regularly traded or where there are no updated price quotations. Cash for Your Business The amount of marketable assets on the books of your business represent holdings that could readily be turned into cash for business purposes. Business Valuation If you want to put an overall value on your business, the values placed on not-readily marketable assets can add some questions to the validity of the valuation.

What are some common examples of marketable securities? | Investopedia

US GAAP Disclosure List US Legal: About the Author Tim Plaehn has been writing financial, investment and trading articles and blogs since SHARE SHARE TWEET EMAIL. Can an LLC Have an Interest Bearing Account? What to Look for in a Balance Sheet When Buying a Company Calculating the Assets or Net Worth of a Company Tangible Vs.