Current assets are everything a company owns that can be converted into cash within one year. They are the most liquid resources on the balance sheet and are essential for day-to-day operations.
Common current assets include cash, accounts receivable, inventory, short-term investments, and prepaid expenses. If a retailer has $50,000 in cash, $30,000 in receivables, and $80,000 in inventory, total current assets are $160,000.
Current assets are compared against current liabilities to calculate working capital and the current ratio — key indicators of a company's short-term financial health.