What are pure current assets?

There are several ways to appreciate the company and determine whether it is likely that it will be a healthy investment. In accounting, there is a current formula of asset, which is a measurement of the financial situation of the company. The term "net current assets" concerns the value of the total current assets of the company after all its current obligations have been deducted. These are tangible assets that may include cash, supplies and receivables, which is the money owed by companies. Pure current assets, also known as working capital, are a reflection of the company's short -term health in the balance sheet, a financial statement submitted by the regulatory body in the region.

In the event that the assets are not sufficient to meet short -term debt obligations, creditors will not be paid and there is a negative working capital. If obligations continue to outweigh the assets for a longer period of time, the Toby could lead to the fact that spolTheness of bankruptcy served. This scenario could indicate that income or sale is declining, while the receivables component in the balance sheet decreases, which would be a warning signal for investors.

There are different types of current assets that represent pure current assets. They may include cash or other assets that can be disposed of or converted to cash in a relatively short period of time. Functions may include assets that can be sold or consumed within one year without interfering with everyday business operations. In addition to cash, current assets may include monetary and deposit accounts, receivables and short -term securities such as stocks that can be quickly destroyed. In addition, supplies and prepaid expenses, including insurance, are all types of current assets.

In addition to repayment of short -term debt obligations, the company could finance short -term expansionInitiative or unplanned expenditure use net current assets. Investments that are less liquid and cannot be easily transferred to cash are considered long -term investments. These assets could include real estate, bonds and corporate equipment. Long -term assets are designed to be held by society for more than one year.

Economist Benjamin Graham has developed a business strategy bound to buy shares that traded under the net current value of assets. This is based on a comparison of shares price with the amount of net current assets. Shares that trade significantly below this value could have the potential to be advantageous investment.