Chapter 22. Management of Current Assets

The current assets presented in this part of the book are accounts receivable and inventory.

Current assets are important to every business no matter how large or small. They pay the bills that flow in from purchases of raw materials, wages, rent, etc. Without sufficient current assets, a company cannot survive. The cash account and the marketable securities account contain all the “real” money a business has. True, accounts receivable presumably will be paid–but as of the date of the balance sheet, they have not been. The inventory may or may not be sold for the amount shown on the balance sheet; only time will tell. For service businesses, inventory is probably not a factor. Remember, “current” means in one year or less.