What role do marketable securities play in liquidity management?

Marketable securities are typically classified as short-term liquid assets, making them readily available to be converted into cash when needed. This characteristic is crucial for liquidity management because it allows organizations to have quick access to funds without having to sell long-term assets or engage in more complex financial transactions. Their liquidity provides a buffer for companies, helping to ensure that they can meet short-term obligations and respond to unexpected cash flow requirements effectively.

This aspect of marketable securities underlines their function in maintaining a company's operational efficiency, as they can often be sold or used in financing arrangements with minimal cost and delay. This makes them vital components in a liquidity management strategy, allowing organizations to balance the need for investments with the necessity of having accessible cash.