Definition:
Current assets include anything that can be turned into cash in less than a year like accounts receivable and inventories. They are usually sorted by most liquid items first with the least liquid last. The most common current assets are:
Cash and cash equivalents – money in the bank, money-market accounts, stocks and bonds – the type you can turn into cash in a day or less if you need to.
Accounts Receivable (A/R) – the amount customers owe the company, the amount has been billed buy payment has not yet been received.
Inventory – includes the value of the products that are ready to be sold (finished goods) as well as those that are still in production (work-in-process), and the raw materials that will be used to make the products.
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Example:
Amounts shown in thousands (000):
Book Excerpt:
(Excerpts from Financial Intelligence, Chapter 11 – Assets)
Assets are what the company owns: cash and securities, machinery and equipment, buildings and land, whatever. Current assets, which usually come first on the balance sheet in the United States, include anything that can be turned into cash in less than a year.
