Short-term investment refers to investing in bonds, securities or funds when the company's cash or bank deposits exceed its daily business needs in order to obtain better returns. The purpose of this kind of investment is to allocate and use funds, and the investment target is assets that can be sold and realized immediately in an active market, so it is classified as current assets.
Accounts receivable, bills and inventories are all assets generated in the course of operation, and the turnover rate of converting them into cash is usually within a business cycle. Prepaid expenses refer to the fact that companies may need to pay in advance to enjoy services, such as prepaid rent or deposit. Theoretically, prepaid expenses can't be realized, but the amount is not too large and its income will often be exhausted within one year, so it is still classified as current assets. Among the current assets, the most liquid are cash and cash equivalents, short-term investments and accounts receivable or bills.
Extended data:
Related characteristics of current assets
1, the occupation pattern of current assets is changeable;
2. The amount of current assets fluctuates;
3. The circulation of current assets is consistent with the production and operation cycle;
4. The sources of current assets are flexible and diverse.
Baidu encyclopedia-current assets