Current Assets

Current assets are all assets expected to be converted into cash, sold, or consumed within one year or within a business’s operating cycle — whichever is longer. They provide a snapshot of a company’s short-term liquidity and operational efficiency.

Common Examples:

• Cash and cash equivalents

• Accounts receivable

• Inventory

• Marketable securities

• Prepaid expenses

Importance:

• Vital for meeting short-term liabilities.

• Used in liquidity ratio calculations (e.g., current ratio, quick ratio).

• Monitored for cash flow management.