Current asset
A current asset is one a business expects to turn into cash, sell, or use up within its operating cycle or twelve months — cash, receivables and inventory are the standard examples classified this way under IAS 1.
FrameworkIAS 1
See it move
A retailer's year-end balances include cash of €3,000, trade receivables of €5,500, inventory of €7,200, and a prepaid insurance premium of €800 covering the next six months. All four count as current under IAS 1 because each will be realised, sold or consumed within twelve months, giving total current assets of €16,500.
The formula
Variables
- Total current assets (€)
- Cash and cash equivalents (€)
- Trade receivables (€)
- Inventory (€)
- Prepayments (€)
Sums the standard current-asset line items to the total current assets reported on the balance sheet.
Check yourself
A company's year-end balance sheet shows: cash €2,100, trade receivables €6,400, inventory €9,800, a prepayment of €500 for next year's rates, and an investment property held for long-term rental income of €120,000. Current liabilities total €12,900. What is the company's current ratio (current assets ÷ current liabilities), to two decimal places?