Definition
Current assets include cash, marketable securities, accounts receivable, inventory, and prepaid expenses. They represent liquidity available for short-term obligations. The current ratio (current assets / current liabilities) measures short-term solvency.
Formula
Current Assets = Cash + Receivables + Inventory + Prepaid Expenses
Example
A company has $20M cash, $15M receivables, $25M inventory, and $5M prepaids. Current assets total $65M. With $40M current liabilities, current ratio is 1.6x.
FAQ
What is Current Assets?
Assets expected to be converted to cash within one year.
How do you calculate Current Assets?
A common formula for Current Assets is: Current Assets = Cash + Receivables + Inventory + Prepaid Expenses
Why is Current Assets important?
Current Assets helps investors evaluate financial statements and make more informed decisions.