Accounting & Finance
Building the current assets total
Everything expected to turn into cash inside twelve months belongs here.
The Formula
CA = cash + receivables + inventory + other
Everything expected to turn into cash inside twelve months belongs here.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| CA | Current assets | currency | Total short-term assets. |
| C | Cash | currency | Bank balances and cash equivalents. |
| AR | Accounts receivable | currency | Money owed by customers. |
| I | Inventory | currency | Stock held for sale or production. |
| O | Other current assets | currency | Prepayments and short-term deposits. |
What Each Symbol Means
CAcurrency
Current assets
Total short-term assets.
Ccurrency
Cash
Bank balances and cash equivalents.
ARcurrency
Accounts receivable
Money owed by customers.
Icurrency
Inventory
Stock held for sale or production.
Ocurrency
Other current assets
Prepayments and short-term deposits.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate working capital page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Working Capital, filed under Business. Every number the guide produces comes from substituting into this one line.