Current Assets

What are current assets?

Current assets are things your business owns that are either cash or can be quickly converted to cash—typically within one year. Your checking account balance, money clients owe you, and inventory you could sell are all current assets. They represent the liquid resources available to run day-to-day operations.

Types of current assets

Common current assets for small businesses:

• Cash — Money in bank accounts
• Accounts receivable — Unpaid invoices from clients
• Inventory — Products or materials held for sale or use
• Prepaid expenses — Payments made in advance (like insurance premiums)
• Short-term investments — Investments easily converted to cash

Why current assets matter

Current assets fund your daily operations and help you meet short-term obligations. The ratio of current assets to current liabilities (the current ratio) indicates whether you can pay upcoming bills. Lenders look at current assets when evaluating your ability to repay loans.