An Explanation of Current Assets

The asset side of the balance sheet is divided into 3 major sections. They include current assets, fixed assets, and other assets. Current assets carry the most value to the small business entrepreneur because of the cash conversion requirement. Cash is the blood that keeps a business alive. What are current assets? How do you rank their respective value to the owner? What should an owner of a small business look for in current assets to assist him in the decision process?

The following describes each of the above and the impact they have on any business:

Current Assets – Definition

There are three primary current assets; cash, receivables and inventory. Other current assets include prepaid expenses, short-term notes receivable and some deposits. But the primary current assets are the most noteworthy for the purpose of this article. Below is

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