The term "current asset" can be defined as what?

The term "current asset" is defined as liquid assets that can be converted to cash within a year. This classification includes resources that are expected to be used or converted into cash within a short time frame, typically within one financial year. Examples of current assets include cash itself, accounts receivable, inventory, and short-term investments. These assets play a crucial role in a company's liquidity and financial health, as they represent the resources available to meet immediate obligations and operational needs.

In contrast, long-term investments involve assets that are meant to be held for more than a year, which do not fit the definition of current assets. Fixed physical property, such as buildings and machinery, refers to long-term tangible assets not easily liquidated. Intangible assets, like patents or trademarks, lack physical substance and also do not qualify as current assets. Thus, understanding what constitutes current assets is essential for evaluating a company's short-term financial stability and operational efficiency.