Why you should check the current assets

The assets section of the balance sheet is divided between current and non-current assets. Broadly, current assets are those which can be quickly converted into cash. Such assets include items like fixed deposits, liquid funds, trade receivables and inventory. On the other hand, non-current assets comprise all other assets which are not part of current assets. A company should have enough liquid assets to cover its normal operating expenses. Otherwise, it could easily fall into a liquidity trap. Non-liquid assets won't be very useful in case the company has to use them to pay its current expenses. However, it's possible that some non-current assets are

This article was originally published on March 30, 2022.