Current Assets

Posted in Finance, Accounting and Economics Terms, Total Reads: 1996

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:

  • Debtors
  • Loans and Advances given
  • Cash
  • Bank Accounts
  • Advance Tax
  • Marketable securities
  • Prepaid expenses
  • 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.

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