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What is quality of assets?

Updated: 4/28/2022
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14y ago

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Quality of assets refers to an asset's ability to generate cash flows over time. High quality assets generally have stable cash flow patterns with steady positive growth. Their value is widely recognized by the financial community, and these assets have a market where they can be traded easily. A high-quality asset does not necessarily have to be highly liquid (instantly convertible into cash), but such a liquidation should not be a difficult, time-consuming process. For example, a prime piece of real estate is not as liquid as a T-Bill, but will sell quickly on the open market. A high-quality asset should also have low risk of losing its value or future cash flows. Low risk usually translates to high credit-worthiness and market stability.

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