They say don’t count your chickens before they hatch but in the business world, when it comes to calculating current costs, this is what you do. You see, this is because current assets refer to the value of all assets that you would expect to convert to cash within the year. This could include cash, accounts receivable, inventory, marketable securities and liquid assets.
For example…
Consider ABC toy shop. They have Christmas toys, Back to School gear and Educational toys in their inventory. They are pretty confident, they will sell all of it this year. They also have ten accounts who are in their accounts receivable book and a few shares in their preschool business which they expect to sell this year. The current assets for ABC toy shop would be the total value of all these assets.
