Current Assets: Meaning, List & Examples

What Are Current Assets?

Current assets are the things a business owns that it expects to sell, use up or turn into cash within 12 months or one operating cycle, whichever is longer. Cash, bank balances, stock and money owed by customers are the main ones. In India, Schedule III of the Companies Act, 2013 sets the test a company uses to decide what counts.

Current assets move in a loop Cash and bank ready to spend Stock waiting to sell Customer dues waiting to collect Buy Sell Collect Each box is a stage on the way back to cash. The time one full loop takes is the business’s operating cycle.

What Counts as a Current Asset

Under Schedule III, an asset is current if any one of these is true:

it will be sold or used up within the normal operating cycle
it is held mainly for trading
it will be realised within 12 months of the balance sheet date
it is cash, unless it cannot be used for at least 12 months after the balance sheet date

Everything else is non-current. Companies using Division I then show current assets under six heads; Ind AS companies use slightly different ones.

Head	What it holds	Example
Inventories	Stock in any form	Raw material, finished goods
Receivables	Customer dues from sales	Unpaid credit bills
Cash	Cash and bank balances	Till cash, current account
Investments	Holdings meant to be sold soon	Liquid mutual fund units
Advances	Short-term loans and advances	Supplier advance, GST credit
Others	Anything else current	Prepaid insurance, accrued interest

Current assets = Inventories + Receivables + Cash and bank + Current investments + Short-term advances + Others

The operating-cycle test is why some stock stays current even after a year on the shelf. A builder’s unsold flats or a distiller’s maturing whisky can take two or three years to sell and still count as current, because a long wait between buying and selling is simply how those businesses run. Where no cycle can be identified, 12 months is assumed.

ICAI’s guidance note on Schedule III explains these tests head by head.

Firms and proprietors are not bound by Schedule III, but their accounts usually follow the same 12-month logic.

Current Assets vs Fixed Assets

Aspect	Current	Fixed
Held for	Sale or use within a cycle	Use over many years
Examples	Stock, customer dues, cash	Machinery, fittings, vehicles
Turnover	Changes every day	Changes slowly
Value falls by	Sale or use	Depreciation

The same item can sit on either side. A laptop is a fixed asset for a CA’s office and stock for the shop that sells it. Advances can switch too: money paid ahead for stock is current, but an advance towards a new machine is a capital advance and stays non-current.

Current Assets Example

A mobile accessories wholesaler in Muzaffarpur, Bihar, closed FY 2025-26 with these balances on 31 March 2026.

Item	Head	Amount
Chargers, cases and earphones	Inventories	Rs.9,84,300
Unpaid bills from retailers	Receivables	Rs.4,62,150
Current account balance	Cash	Rs.2,16,700
Cash in the shop	Cash	Rs.38,450
GST credit balance	Advances	Rs.57,900
Shop insurance paid ahead	Others	Rs.11,600
Total	All heads	Rs.17,71,100

Note: this is an invented example for illustration only.

The business also holds a Rs.3,00,000 fixed deposit, but it matures in June 2027, more than 12 months away, so it is shown as non-current instead.

Against current liabilities of Rs.10,42,800, the current ratio is 1.70, which looks comfortable. Take closing stock out and the quick ratio falls to 0.75. More than half of this total will turn into cash only when the chargers and cases sell.

What Current Assets Tell a Lender

Banks lend against stock and customer dues every day. A shop with a cash credit limit usually files a monthly stock statement, and the bank sets its drawing power from stock and accounts receivable, less a margin. Many banks leave out customer dues older than about 90 days, so slow collections shrink the limit you can actually use.

There is no single right current ratio. Textbooks quote 2:1, while many Indian lenders treat 1.33 as a floor, a benchmark that goes back to the Tandon Committee’s lending norms.

Frankly, the total matters less than its mix. Across the retail businesses we work with at Petpooja, the problem is rarely having too little; it is too much sitting as stock that is not moving. A rising total alongside falling cash is exactly what a cash flow statement exposes.

Subtract current liabilities from these assets and you have working capital, which this working capital requirement calculator works out for your own figures.

Spot Cash Stuck in Stock and Unpaid Bills

Most of a business’s working cash waits in two places: stock on the shelf and bills customers have not paid. For retail businesses, Petpooja Invoice offers Real Time Inventory Management and AR/AP Reports, and lists Due Management among its plan features.

For restaurants, where stock means ingredients and most dine-in bills are paid on the spot, Petpooja POSS gives error-free reports on day-end sales and inventory consumption.

Take your list of customer dues, mark everything older than 90 days, and see how much of it is really cash in waiting.

Frequently Asked Questions

Is stock a current asset?

Yes. It counts as current even when it takes longer than a year to sell, as long as that is the normal operating cycle of the business.

Is a fixed deposit a current asset?

It depends on when it matures. A deposit due within 12 months of the balance sheet date is current, while a longer one, or one held as margin money beyond that period, is non-current.

What is the formula for current assets?

Under Division I, add up inventories, receivables, cash and bank, current investments, short-term advances and anything else current. Subtract current liabilities from that total and you get working capital.

What is a good current ratio in India?

No single figure fits every trade. Many Indian lenders want at least 1.33, textbooks quote 2:1, and a business that sells mostly for cash often runs lower than either.

Current Assets