Inventory is usually less liquid than accounts receivable because inventory must first be sold before cash can be received.

Question

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Inventory is a type of asset that must first be sold before cash can be received. This means that it takes longer to convert inventory into cash than it does for accounts receivable, which represent amounts owed by customers and can be converted to cash relatively quickly. Therefore, inventory is generally considered less liquid than accounts receivable.

Inventory Is Usually Less Liquid Than Accounts Receivable Because Inventory