Average Current Assets refers to the average value of a company’s short-term assets over a specific period of time, typically calculated by adding the beginning and ending balances of current assets and dividing the sum by two. Current assets include cash, accounts receivable, inventory, and other assets that are expected to be converted into cash within one year. This metric is commonly used by investors, analysts, and lenders to assess a company’s liquidity and ability to meet short-term obligations. A higher average current assets value indicates a stronger financial position and greater ability to cover immediate liabilities.
Average current assets refer to the average value of a company’s current assets over a specific period of time, usually a year. Current assets are those that can be easily converted into cash within a year, such as cash, accounts receivable, and inventory. The average current assets are calculated by adding the current assets at the beginning and end of the period and dividing by two. This metric is used to assess a company’s liquidity and ability to meet short-term obligations. It is often compared to the company’s current liabilities to determine its current ratio, which is a measure of its ability to pay off its debts.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 29th March 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/average-current-assets/
- Modern Language Association (MLA):Average Current Assets. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/average-current-assets/.
- Chicago Manual of Style (CMS):Average Current Assets. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/average-current-assets/ (accessed: May 09 2024).
- American Psychological Association (APA):Average Current Assets. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/average-current-assets/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts