Pages
- Home
- New WordPress Blog
- What is Value Investing?
- Portfolio 2K15
- Research Reports
- Videos
- Books
- Definitions - Investing
- Accounting and Financial Terms
- Formulae
- Calculator
- "How To?" Artciles
- "What Is?" Articles
- Slides/ Presentations/ Pictures
- Questions and Answers
- Warren Buffett's Inspirational Quotes
- Poems
- Investing Jokes
- Games
- Audience Speak
- Tweets
- Forum
- News
- Accreditations
- Website
- Contact
Quick Links
- New WordPress Blog
- Net Block (Fixed Assets) Definition
- Total Outside Liabilities to Tangible Net Worth (TOL/ TNW) Formula
- How to Navigate Turbulent Stock Markets?
- Why Mutual Fund Returns Dip?
- Is the Stock Market a Place to Make a Fast Buck?
- How to Find the Fair Price of A Stock?
- How to Calculate the Intrinsic Value of Shares?
- Price to Book Value Ratio - Formula
- Debt Equity Ratio - Formula
- Total Outside Liabilities to Tangible Net Worth (TOL/ TNW) Formula
Showing posts with label Current Assets. Show all posts
Showing posts with label Current Assets. Show all posts
Tuesday, October 25, 2016
Current Assets Example Slide
Monday, October 24, 2016
What are Current Assets?
Meaning:
The current
means present, immediate, recent and so forth. Therefore, current assets are
those assets that are meant and expected, to be converted into cash in an
operating cycle quickly or immediately. In the accounting parlance one year is the accepted time period.
Therefore all the assets that are expected, to be converted into cash within a
year are called current assets.
On the other hand assets that are meant
to be held for a long period or for period exceeding one year are called fixed
assets or non-current assets.
Examples of current assets:
- Cash and bank balances
- Trade receivables also called sundry debtors
- Inventories or stocks of raw materials, semi-finished and finished goods, consumables, spare parts, etc.
- Temporary loans and advances that will either be returned or charged to expenses within a year, etc.
Importance/ Significance:
Holding adequate current assets in
various forms is both inevitable as well as mandatory for the smooth and
uninterrupted operations. Additionally, holding adequate current assets is
vital for the liquidity of the
organization, meaning ability to make timely payments to suppliers and meeting
expenses. Employing adequate current assets thereby improves the current ratio - another important financial indicator.
Having emphasized the need for adequate
current assets for the short term health of the company, excess current assets
is not a good sign, indicating inefficiency of the operations.
Labels:
Accounting Terms,
Current Assets,
current ratio,
What is?
Subscribe to:
Posts (Atom)