Current assets

Current assets are assets that are only in the company's possession for a short time, mostly because they quickly become something else: the raw material becomes a product, and the receivable becomes funds . If we finance the current assets well, our company can continue to operate smoothly.

Current assets are like that assets, which only remain in the company's ownership for a short time in the form in which they exist. A typical example of this is the raw material. At a bakery, flour is a current asset, as it has value in itself, but it is processed quite quickly: it is used to produce higher-value pastries and sell them. 

After the sold goods, a receivable against the customer arises, which is also a current asset. The receivable also has value in itself. In the bakery, when it does not sell its products to other businesses, the receivable immediately turns into cash, since the customer pays for the pastry immediately when he buys it in the store. However, in countless other industries, some time passes between the fulfillment and the receipt of money, typically the industries that produce intellectual products. 

Current assets therefore include inventories and receivables, as well as cash and short-term securities too. All of these constantly change form, they typically expire or are sold, so that the money thus obtained can then be put back into production. The with fixed assets in contrast, the characteristic of rotating assets is that they change shape quickly, i.e., as their name indicates, they "rotate".

In the case of current assets, the question of their financing also often arises. For the bakery mentioned above, flour is a serious item, but a carpenter has to buy wood, and a metal industry company has to buy copper wire and steel sheet for a lot of money. In the best case, they can be quickly made into a product and sold at a higher price, but until this happens, the purchase of current assets must be financed again and again. 

He is very good at that today current assets financing there are those whose essence is precisely that we can use them for such fast-moving, regularly recurring editions finance, then when we get money, we repay the credit. A good current assets financing can therefore greatly improve our company liquidity, i.e. immediate solvency, which is essential for the smooth and continuous operation of the business.