Explanation of Marketable Securities:

Listed on the Balance Sheet, Marketable Securities includes securities, or investments that can quickly and easily converted into cash.  If a company invests some of its cash for the short-term (less than a year), this is where the cash goes.  The company will use their cash to buy temporary investments like notes, certificates, bonds, and U.S. Treasury Bills - all low risk securities that can be liquidated into cash should the company need these extra reserves.

Importance of Marketable Securities:

For companies that are financial institutions (banks), and insurance companies, Marketable Securities are a significant portion of their income.  Depending on the industry of other companies, this line item on the Balance Sheet should be relatively small. For example, manufacturing companies might have some Marketable Securities, but this figure should pale in comparison to their inventory, and plant, property and equipment figures.