Short-term Assets

Short-term Assets

Another term for current assets, representing resources expected to be converted to cash or consumed within one year or one operating cycle, including cash, accounts receivable, inventory, and prepaid expenses.

For instance, a manufacturing company’s short-term assets might include $500,000 in cash and cash equivalents, $750,000 in inventory, $600,000 in accounts receivable, and $50,000 in prepaid expenses.

Short-term assets are critical for daily operations and meeting current obligations. Their management directly affects liquidity, working capital efficiency, and operational capacity. The composition of short-term assets varies by industry, with retailers carrying more inventory, service businesses maintaining higher cash reserves, and manufacturers balancing raw materials with finished goods.