What is a current asset?

Definition of Current Asset

A current asset is a company's cash and its other assets that are expected to be converted to cash within one year of the date appearing in the heading of the company's balance sheet. However, if a company has an operating cycle that is longer than one year, an asset that is expected to turn to cash within that longer operating cycle will be a current asset.

Current assets are usually presented first on the company's balance sheet and they are arranged in their order of liquidity.

Current assets are also a key component of a company's working capital and the current ratio.

Examples of Current Assets

Examples of current assets and the typical order of liquidity include:

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