Cash and Cash Equivalents
Includes physical currency, bank balances, and highly liquid investments with maturities of three months or less.
Understanding Current Assets in Financial Management
Master the key concepts of current assets and their impact on business liquidity
What Are Current Assets?
Current assets are resources that a company expects to convert to cash or use up within one year or one business cycle, whichever is longer. These assets are essential for day-to-day business operations and maintaining liquidity.
Key Characteristics:
- High liquidity and convertibility to cash
- Essential for operational efficiency
- Short-term nature (usually within 12 months)
- Direct impact on working capital
Types of Current Assets
Accounts Receivable
Money owed to a company by its customers for goods or services delivered but not yet paid for.
Inventory
Raw materials, work-in-progress, and finished goods held for sale in the normal course of business.
Marketable Securities
Short-term investments that can be quickly converted to cash, such as stocks, bonds, or money market instruments.
Prepaid Expenses
Payments made in advance for goods or services to be received in the future.
Current Assets Calculator
Current Ratio
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Working Capital
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