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Current Assets
Definition
Current assets are assets that can be converted to cash within one year, including cash, savings, stocks, and accounts receivable.
Explanation
Current assets include cash, checking and savings accounts, certificates of deposit, stocks, bonds maturing within a year, and accounts receivable. They are the most liquid assets and provide financial flexibility. Companies list current assets first on their balance sheets.
A healthy level of current assets ensures you can cover short-term obligations and emergencies without selling long-term assets.
Example
A person's current assets of $25,000 might include $5,000 in checking, $15,000 in savings, and $5,000 in stocks.