Editing Current asset

{{Short description|Assets held for less than a fiscal year}}
{{Accounting}}

In [[accounting]], a '''current asset''' is an [[asset]] that can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the current [[fiscal year]], operating cycle, or financial year. In simple terms, current assets are assets that are held for a short period. 

Current assets include [[cash]], [[cash equivalents]], short-term investments in companies in the process of being sold, [[accounts receivable]], stock [[inventory]], supplies, and the [[Deferral|prepaid]] liabilities that will be paid within a year.<ref>J. Downes, J.E. Goodman, "Dictionary of Finance & Investment Terms", Barons Financial Guides, 2003; and J. G. Siegel, N. Dauber & J. K. Shim, "The Vest Pocket CPA", Wiley, 2005.</ref> Such assets are expected to be realised in cash or consumed during the normal operating cycle of the business. On a [[balance sheet]], assets will typically be classified into current assets and long-term [[long-term assets|fixed assets]].<ref>Larry M. Walther, Christopher J. Skousen, "Long-Term Assets", Ventus Publishing ApS, 2009</ref> 

The [[current ratio]] is calculated by dividing total current assets by total [[current liability|current liabilities]].<ref>{{Cite web|url=https://corporatefinanceinstitute.com/resources/knowledge/finance/current-ratio-formula/|title=Current Ratio Formula - Examples, How to Calculate Current Ratio|website=Corporate Finance Institute|language=en-US|access-date=2019-12-03}}</ref> It is frequently used as an indicator of a company's [[accounting liquidity]], which is its ability to meet short-term obligations.<ref>{{Cite web|url=https://www.thebalancesmb.com/liquidity-position-analysis-with-ratios-393233|title=Calculate Liquidity Position Using Financial Ratio Analysis|last=Peavler|first=Rosemary|website=The Balance Small Business|language=en|access-date=2019-12-03}}</ref> The difference between current assets and current liability is referred to as [[trade working capital]].

The [[quick ratio]], or acid-test ratio, measures the ability of a company to use its near-cash or quick assets to extinguish or retire its [[Current liability|current liabilities]] immediately. Quick assets are those that can be quickly turned into cash if necessary and may not be used for a substantial period of time such as twelve months.

==References==
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{{DEFAULTSORT:Current Asset}}
[[Category:Asset]]