CHINA / Backgrounder
Current asset
(Wikipedia)
Updated: 2006-10-19 14:07
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.
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