Total Current Assets of a company are the sum of all assets that can be converted into cash within one business cycle or one year. They include cash, accounts receivable, inventory, and other short-term assets. These assets are critical as they are used to fund everyday operations and pay short-term expenses.
The concept of total current assets is an integral part of a company's financial health analysis. It includes cash and cash equivalents, which are the most liquid assets, followed by net receivables (amounts owed by customers), and inventory (products that are ready for sale).
Other short-term assets may consist of prepaid expenses, short-term investments, and supplies. In essence, these are assets that can be converted into cash within a year or within the operating cycle of the business.
The total current assets figure is a reliable indicator of a company's ability to cover its short-term liabilities without needing to sell off long-term assets or take on additional debt. However, it needs to be compared with current liabilities to get a clearer picture of a company's liquidity position.
For Amazon, total current assets would include cash and equivalents, customer accounts receivable, inventory of goods for sale, and any prepaid expenses such as advance payments to suppliers.
Apple's total current assets include cash and short-term marketable securities, accounts receivable from customers, inventories of various products and components, and prepaid expenses such as advance rent payments or insurance premiums.
For Johnson & Johnson, total current assets would comprise of cash equivalents, accounts receivable from hospitals and distributors, inventories of medicines and healthcare products, and other short-term assets like prepaid expenses and short-term investments.