Current Assets
Resources expected to be converted to cash or used within one year, including cash, receivables, inventory, and prepaid expenses for short-term operations.
Current Assets
Resources a company expects to convert to cash or use up within one year or one operating cycle, whichever is longer, including cash, accounts receivable, inventory, and prepaid expenses.
For instance, a retail store’s current assets might include $50,000 in cash, $75,000 in inventory, $40,000 in accounts receivable, and $5,000 in prepaid insurance, totaling $170,000 in resources available for short-term operations.
Current assets are essential for day-to-day operations and managing liquidity. They form the numerator in liquidity ratios like the current ratio and quick ratio, helping analysts assess a company’s ability to meet short-term obligations with available resources.