(g) Current Assets:
Given below is a sample balance sheet:
(g) Current Assets:
Current Assets are those which can be converted into cash within a year. Inventory, trade receivables, investments, short term loans and advances and cash are all examples of current assets. Current assets analysis is important to understand the working capital situation of the company. A large level of inventory or trade receivables may mean capital tied up and the company may be paying a high cost for debt. Analysing the current assets relative to past trends and peer group companies will give insights into the working capital management of the company. Lower inventory days and trade receivables days augur well for the company.
In the above example, Current Assets are Rs. 50.
