What are Current Assets of a Company?

Current assets are assets owned by a company which are used in the normal course of business or are generated by the company in the course of business such as debtors or finished stock or cash.
The rule of thumb is that any asset that is turned into cash within twelve months is a current asset. Current assets can be divided essentially into three categories :

Converting assets - Assets that are produced or generated in the normal course of business, such as finished goods and debtors.
Constant assets - Constant assets are those that are purchased and sold without any add-ons or conversions, such as liquor bought by a liquor store from a liquor manufacturer.
Cash equivalents - They can be used to repay dues or purchase other assets. The most common cash equivalent assets are cash in hand and at the bank and loans given.

The current assets a company has are:

Inventories - These are arguably the most important current assets that a company has as it is by the sale of its stocks that a company makes its profits.

Stocks, in turn, consist of:

• Raw materials - The primary purchase which is utilized to manufacture the products a company makes.
• Work in progress - Goods that are in the process of manufacture but are yet to be completed.
• Finished goods - The finished products manufactured by the company that are ready for sale.

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