Financial Tunes

What is the definition of current asset of a company? How current asset is calculated?

How current asset is helpful in determining the financial health of a company/individual. Is fixed asset, current asset.

Public Comments

1. 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, or one business cycle - whichever is longer. 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. AJM
2. in the question itself there is a answer ie. current asset means with in one year the asset can be converted as cash other wise it is called long term assets. Current assets calculation is total of : Stock on hand, cash, debtors, advances and deposits, cash at bank etc. this items should be able to convert to cash within one year. and it is not a fixed asset. Current asset will be helpful for determining the short term liabilities ( payable within in one year ) to pay back to the sundry creditors, and other liabilities. Generally money lenders and creditors one who look how one can pay back the dues as early as possible for which they used to see first current asset only. Generally current ratio may be 2:1.
3. In addition to these other answers, current assets tend to be converted into cash easily in the current year or business cycle (meaning current assets are liquid).
4. The definiion of current assets are those assets which can be converted into cash within a year are knwn as current assets. it can be calculated as:- ASSETS=CAPITAL +LIABILITES