"Trading securities" are debt investments that the company intends to actively buy and sell for profit. they are always classified as current assets.
What are Trading securities?
Securities are financial instruments which are fungible and traded on stock markets.
Trading securities have been securities held by businesses that are used to profitably store excess funds.
Some key features regarding the Trading securities are-
- These instruments may be any type of security, such as equity, debt, or derivatives.
- They must, however, be marketable, i.e. mature within one year and be easily tradable just on open market.
- They are typically managed in three ways:
- Reserved until maturity
- Set aside for trading
- Available for purchase
- When a company buys a trading security, it must be confident that it will profit inside the short term.
- They must also be able to easily trade with the security (liquidate it) if they require cash.
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