Current Assets Definition

Current Assets are assets that can be or are expected to be converted in to cash with one year.

Currents assets for any company can be found on the balance sheet, often at the very top. Consisting of assets that can be or are expected to be converted in to cash within 12 months or less. Current assets will help investors and creditors better understand how well a company is able to fund its day to day running's and operations, as well as provide a means of assessing any risk involved.

The current assets of a company will usually total the following items;

Accounts Receivables
Accounts receivable is money due to a company for goods or services that have not yet been paid for.

Cash is legal tender usually in the form of currency, used in exchange for goods or services. A company may store its cash within a bank or some form of financial institution.

Cash Equivalents
Cash equivalents are highly liquid short term investments with maturity periods of three months of less.

Inventory are goods being held and made available for sale.

Marketable Securities
Marketable seccurities are short term investments that can be very easily baught and sold.

Prepaid Expenses
Prepaid expenses are payments made in advance for goods or services to be received at a future point.

You may also be interested in: