Posted in Finance, Accounting and Economics Terms, Total Reads: 1279
Definition: Current Assets
Any resource controlled by the firm which provides benefits within a year is termed as Current Asset. An asset side of balance sheet is typically divided into 2 parts- Fixed Assets and Current Assets. Current assets include:
Inventory (Raw materials, Work in Progress and finished goods)
Current Assets are also known as “GROSS WORKING CAPITAL”. If a firm wants to make it operations more efficient, it needs to focus on current assets. This is because a huge amount of money is tied up in current assets, therefore there is an opportunity cost attached with it. This cash could have been deployed elsewhere and money/interest could have been earned from it. The firm which deals in services generally has lesser current assets than a firm that deals in manufacturing.