Current Assets

Current Assets Concept: Current Assets (sometimes also designated as exploitation assets or even running assets) are all companies’ assets…

Current Assets Concept

Current Assets (sometimes also designated as exploitation assets or even running assets) are all companies’ assets that, in normal situations, is converted into availabilities (or ways of payment) in an equal or inferior time extent in which lasts the exploitation cycle. Is therefore different from the Fixed Assets (or Investment Assets or even Permanent Assets) whose purpose is the production or support to the several internal operations of the entity and not its direct conversion into payment means.

The separation of current assets relatively to the remaining assets has special relevance in the analysis of the companies’ financial structure on a short term horizon, namely the liquidity analysis. The cases in which the current assets are not enough to cover the liabilities of similar maturity (the called short term liabilities), it’s said that the company faces a liquidity problem which can only be solved through the conversion of fixed assets into current assets or by the conversion of short term liabilities into more stable capital like the long term liabilities or even the equity.

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