Current Assets

Financial Dictionary -> Investing -> Current Assets

In business current assets are cash itself or assets owned by the business that can be turned into cash quickly (through sale). Stock is considered a current asset and so is outstanding money owed to the business. The time period of turning assets in to cash quickly is usually considered to be by time the next balance sheet is issued, or within the current financial year.

On a business's balance sheet, assets will normally be categorized into current assets and long term assets. Current assets go towards funding the day to day operations in the business, aka its working capital.

The figures of a business's current assets are used in many ratios, calculations and for analysis. It is one of the factors that go towards valuing a business and its financial stability.

Ratios like the current ratio and the quick ratio used current assets to determine whether a business is able to meet their current day to day expenses.

During times of liquidation a business's current assets are sold and used to pay off debt and money owed to shareholders, so creditors and investors are actively interested in the value of a company's current assets.