Current assets/Non-current assets

    By
    sebkuhnert
    -
    0
    16416

    What are current assets and non-current assets?

    Assets are useful or valuable resources owned by a company. On a company’s balance sheet, these are normally split into current assets and non-current (or “long-term”) assets.

    Current assets

    Current assets are assets which can easily be converted into cash or used to pay-off current liabilities within one year.

    Examples of current assets include cash, inventory, accounts receivable (money that customers owe the company), prepaid liabilities or other liquid assets.

    These are the assets that help companies operate on a day-to-day basis, covering expenses as they arise and ensuring the smooth functioning of business activities.

    Non-current assets

    Non-current assets are assets which represent a longer-term investment and cannot be converted into cash quickly. They are likely to be held by a company for more than a year.

    Examples of non-current assets include land, property, investments in other companies, machinery and equipment. Intangible assets such as branding, trademarks, intellectual property and goodwill would also be considered non-current assets.

    The cost of non-current assets is often spread over the length of time for which the asset will be in use, rather than allocating the full cost to the year in which the asset was acquired.

    To learn more about how a company’s financial statement is structured, read our lesson:

    Fundamental analysis of stocks: overview