Current asset
In
accounting, a
current asset is an
asset on the
balance sheet which is expected to be sold or otherwise used up in the near future, usually within one year. Typical current assets include
cash, cash equivalents,
accounts receivable,
inventory, the portion of prepaid accounts which will be used within a year, and short-term investments.
On the 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.
