Current Assets
Business assets convertible to cash within 12 months.
Formula
Current Assets = Cash + Receivables + Inventory + Short-term Investments
Real World
Tesco holds billions in current assets — mostly inventory on shelves and cash from daily sales — enabling it to pay suppliers and staff on an ongoing basis.
Exam Focus
When asked to 'assess liquidity', always identify which current assets are most liquid; cash differs significantly from slow-moving inventory.
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