In accounting, a current asset is an asset which can either be converted to cash or used to pay current liabilities within 12 months. Typical current assets include cash, cash equivalents, short-term investments, accounts receivable, inventory and the portion of prepaid liabilities which will be paid within a year.
On a balance sheet, assets will typically be classified into current assets and long-term assets.
The current ratio is calculated by dividing total current assets by total current liabilities. It is frequently used as an indicator of a company's liquidity, its ability to meet short-term obligations.
Famous quotes containing the words current and/or asset:
“You are the current of the frozen stream,
Shadow invisible, ambushed and vigilant flame.”
—Allen Tate (1899–1979)
“Imagination is a valuable asset in business and she has a sister, Understanding, who also serves. Together they make a splendid team and business problems dissolve and the impossible is accomplished by their ministrations.... Imagination concerning the world’s wants and the individual’s needs should be the Alpha and Omega of self-education.”
—Alice Foote MacDougall (1867–1945)