Explanation of "Current Assets"
Definition:
"Current assets" are things that a company owns that can easily be turned into cash within a year. This includes cash itself and other items that can quickly be sold or used to pay bills.
Usage Instructions
When to Use: You use "current assets" when talking about a company’s financial situation. It is often used in accounting, finance, or business discussions.
Who Uses It: Business owners, accountants, and financial analysts.
Examples
"The company reported that its current assets have increased, which is a good sign for its financial health."
"Cash, inventory, and accounts receivable are all examples of current assets."
Advanced Usage
In finance, current assets are important because they indicate how well a company can pay its short-term debts. Analysts often compare current assets to current liabilities (what the company owes) to assess liquidity.
Word Variants
Current Liability: This is the opposite of current assets, referring to debts or obligations that need to be paid within a year.
Asset: Refers to anything of value owned by a person or company.
Different Meanings
Outside of finance, "current" can mean "happening now" or "up-to-date." However, in the term "current assets," it specifically refers to the time frame of one year.
Synonyms
Liquid assets: This term also refers to assets that can quickly be turned into cash.
Short-term assets: Similar to current assets, focusing on the time frame for conversion to cash.
Idioms and Phrasal Verbs
While "current assets" is a specific term with a clear meaning, here are some related idioms and phrases:
Summary
"Current assets" are an essential part of a company's financial health, representing resources that can quickly be converted into cash.