Question

______ of a firm refers to those assets which can be converted into cash or cash equivalents in a short period of time.

Options

• Current assets

• Quick assets

• Long term assets

• None of the above

Answer 1

Current assets

Explanation -

A company's current assets are those that can be converted into cash or cash equivalents in a short period of time, usually less than a year. These assets are utilised to make day-to-day business operations easier. These assets provide liquidity to the organisation since they can be easily turned into cash or cash equivalents. Such assets are acquired by businesses in order to meet their numerous payment commitments. Such assets, on the other hand, provide very little return and are hence less profitable. Short-term and long-term financing options are available for current assets.