Current asset

Current assets (omsättningstillgångar) are the assets a company expects to use up, sell or convert into cash within a year. They include inventory, trade receivables, prepaid expenses, short-term investments and cash and bank.

Together with fixed assets, they make up the assets side of the balance sheet. The ratio between current assets and current liabilities is called the current ratio and shows whether the company can pay its bills on time. If you leave out inventory, you get the quick ratio.

At the year-end closing, current assets are valued using the lower of cost and net realisable value principle, meaning at the lower of the acquisition cost and the net realisable value (the selling price minus the cost of selling). Inventory that has lost value must therefore be written down.