NATURE OF CAPITAL AND INCOME [Cuar. V 
§ 10 
Insolvency may exist for a time without being known; 
there may be no legal bankruptcy. Legal bankruptcy 
exists as soon as there is a legal declaration of inabilit y 
to meet obligations. This may not be true insolvency. 
For instance, the assets may exceed the liabilities, but the 
cash assets at the particular time may be less than the cash 
liabilities due at that time. This condition we may call | 
pseudo-insolvency. In such a case, a little forbearance on 
the part of creditors may be all that is necessary to prevent 
financial shipwreck. 
  
A wise merchant, however, will not only avoid insolvency, 
but also pseudo-insolvency; that is, he will not only keep 
his assets in excess of his liabilities by a safe margin, but 
HE will also see that his assets are invested in the right form 
i so as to enable him to cancel each claim at the time and 
in the manner agreed upon. 
From this point of view there are three chief forms of | 
assets, — cash assets, quick assets, and slow assets. A cash | 
  
  
asset is property in actual money, or what is acceptable in 
place of money. A quick asset is one which may be ex- 
changed for cash in a relatively short time, as, for instance, 
call loans, short-time loans, and other marketable securities. 
A slow asset is one which can be exchanged for cash only in a 
relatively long time, as real estate, office fixtures, and many- 
facturers’ equipment. The skill of a good business man 
consists in properly marshaling these various constituents 
of his assets. 
eT I  —_. 
EE 
§ 11 
When we speak of the assets falling short of the liabilities, 
we refer only to those assets which are included in the 
balance sheet. There may be, outside of the company, 
private means of stockholders adequate to meet the debts 
of a company, but unavailable. In fact, in the case of a 
joint stock company, there is express provision for “limited