Balance Sheet Assets

The aggregate worth of current assets presented on a balance sheet represents the collective value of all assets anticipated to transform into cash within a span of one year.

Such assets encompass cash, cash equivalents, outstanding receivables, inventory, marketable securities, and prepaid expenses.

The total value of current assets is an important measure of a company’s liquidity, or its ability to meet its short-term obligations.

A company with a high level of current assets is generally considered to be more liquid than a company with a low level of current assets.

The formula for calculating the total value of current assets is:

Total current assets = Cash + Cash equivalents + Accounts receivable + Inventory + Marketable securities + Prepaid expenses

For example, if a company has cash of $10,000, cash equivalents of $5,000, accounts receivable of $20,000, inventory of $30,000, marketable securities of $10,000, and prepaid expenses of $5,000, then its total current assets would be $80,000.

You can find the total value of current assets on the balance sheet, which is one of the three financial statements that companies must prepare.

The balance sheet shows the company’s assets, liabilities, and equity at a specific point in time.

The total value of current assets is a useful metric for creditors, investors, and other stakeholders to assess a company’s financial health.

Generally, people consider a company more financially healthy if it has a high level of current assets compared to a company with a low level of current assets.

To visit: https://www.incometax.gov.in

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