Current assets

Current assets are resources the company owns that are expected to be converted into cash or consumed within one year or a normal operating cycle. This covers cash, bank deposits, short-term investments, trade receivables, inventory and other assets intended for conversion or for use in operations.

Types of current assets

• Cash and bank deposits: Physical cash and deposits in bank accounts that are available for immediate use.
• Short-term investments: Securities that can easily be converted into cash, such as shares, bonds or money market funds.
• Trade receivables: Outstanding amounts that customers owe for goods or services delivered.
• Inventory: Raw materials, work in progress and finished goods intended for resale.
• Short-term receivables: Interest, outstanding invoices or other receivables that are expected to be settled shortly.

What is it used for?

Current assets keep day-to-day operations going and cover short-term financial obligations. They are used to finance operating costs, repay debt and maintain liquidity.

Tips for optimising the use of current assets

1. Practise strict credit management and follow-up of receivables.
2. Balance inventory so as to avoid over- or understocking.
3. Negotiate favourable payment terms with suppliers.
4. Actively monitor cash flow with effective liquidity strategies.

Good management of current assets ensures that the business has sufficient liquidity to cover its obligations, and contributes to good financial health.