Current Assets
Current assets are assets that are likely to be converted into or exchanged for cash within 12 months. The most obvious type of current asset is cash, the most liquid asset of them all. Other current assets include:
- • Cash equivalents. Cash equivalents can be easily converted into cash and are nearly as liquid. Any highly liquid security that has a predictable market value and matures within three months of being acquired is considered a cash equivalent. Examples of cash equivalents include money market funds, short-term Treasury bills, and commercial paper.
- • Marketable securities. Marketable securities are exactly what they sound like: securities that can be readily sold. A security that has a predictable market value may qualify as a cash equivalent, but securities that are subject to fluctuations in value—shares of c