current assets

plural noun
Updated on: 14 Nov 2017

Definition of current assets

:assets of a short-term nature that are readily convertible to cash

Recent Examples of current assets from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'current assets.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of current assets

circa 1909


Financial Definition of CURRENT ASSETS

current assets

What It Is

A current asset is cash or any asset that can be reasonably converted to cash within one year.

How It Works

Current assets typically include categories such as cash, marketable securities, short-term investments, accounts receivable, prepaid expenses, and inventory.

Restricted cash (that is, cash that cannot be withdrawn or used for current operations), depreciable assets, receivables that are not due in 12 months or less, and land are examples of things that are not current assets.

Why It Matters

Current assets are important because they indicate how much cash a company essentially has access to within the next 12 months outside of third-party sources. It is indicative of how the company funds its ongoing, day-to-day operations, and how liquid a firm is. The ratio of current assets to current liabilities is particularly important in judging liquidity.


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