What are Current Assets

Current assets are the lifeblood of any business as net current assets represent the liquidity of a business and its ability to finance its trading.

Definition of Current Assets

Cash, accounts receivable and stock / inventory in that order of importance are the three most common current assets held by any business. “Current” is defined as being cash convertible within twelve months.

Current Assets and Liquidity

Current assets less liabilities payable within one year broadly described the liquidity of a business. In Figurewizard  balance sheet forecasts it is shown both as net current assets and its more common definition - working capital.

The perceived quality of working capital is very important. For example accounts receivable thought to be at risk or stock / inventory items seen as slow sellers are likely to call their “current” status into question, in which case auditors are going to insist on writing down their value.

Other Current Assets

Prepayments and insurance premiums whereby the expiry of the cover is beyond the end of the financial year will also count as current assets.

For example if a trade protection policy with an annual premium of £2000 still has three months to go at the end of the financial before renewal, £500 (i.e. 25%) will be treated as a current asset.

Forecasting Current Assets

Banks, creditors and potential investors will aways attach the greatest importance to a balance sheet forecast and the most important component of that will be the relationship between current assets and current liabilities.

To view how Figurewizard can quickly and easily produce such forecasts for you simply from your raw forecast figures, follow the links below or select one of the sample forecasts from the menu on the left.

Corporation Tax and Marginal Relief From 2023 Deferred Income Explained What is a Monthly Cash Flow Forecast What is Pretax Profit How does a balance sheet balance? Lockdown Recovery: Forecasting Profits, Cash and Finance. How to Apply for Business Interruption Scheme with Figurewizard How to calculate liquidity and short-term liquidity How to calculate markup and margin The Truth about Monarch Airlines Labour's Spending over 10 years from 2000 How to make profits and not run out of cash Credit Checking - How to Read Micro or Short Form Accounts Amortisation of Arrangement Fees for Long Term Loans BHS Profits Performance 2010 - 2014 BHS profits, liquidity and cash flows 2009 - 2014 How to Calculate a Free Cash Flow Forecast Campari: How to apply for a bank business loan What are Current Liabilities What are Current Assets Late Payers and Cash Flow What is Operating Cash Flow? What is Working Capital How to Read a Balance Sheet Business Planning Cash Flow Calculator Short Term Liquidity Business Liquidity Corporation Tax is not Calculated on Net Profit Small Business Corporation Tax Cash Flow Calculator Using Figurewizard - VAT Using Figurewizard - Sales by Month Using Figurewizard - HP or Instalment Plan Budgets Using Figurewizard - How the budgeted cash flow forecast is calculated Using Figurewizard - Fixed Asset Budgets Using Figurewizard - Calculate Purchase of Goods Using Figurewizard - Forecasting Payments to Suppliers Using Figurewizard - How to Forecast Cash Collection Solvency and the Balance Sheet Property in the Balance Sheet Why Equity is a Liability Asset Management and Liquidity Selling Fixed Assets Contracts: Invitation to Treat What is Deferred Income Loss on the Sale of Fixed Assets Calculating Gross Profit Margin Profit and Loss Statement What is Operating Profit What is Net Operating Revenue What is Equity Profit on the Sale of Fixed Assets How Taxable Profit is Calculated What are Operating Overheads Overheads - Provisions How Depreciation is Calculated What is Business Operating Activity What are Fixed Assets Liquidity and Cash Flow Balance Sheet Liabilities and Leases Stock or Inventory Control What is Distressed Stock or Inventory What is Interest Suspense Account Product Safety Laws What is a Bill of Exchange What is Payment at Sight What is a Pro Forma Invoice What is a Bill of Lading What is a packing note What is Demurrage Cash Flow Forecasts and Planning Factoring: Invoice Discounting and Cash Flow How Does VAT Work Figurewizard as a Sales Aid for Factoring and Invoice Discounting