Current assets refer to all assets a company owns that are expected to be converted into cash or consumed within a year or within the operating cycle of the business, whichever is longer. These include cash and bank balances, accounts receivable, inventory, marketable securities, and prepaid expenses. They are an important part of a company's balance sheet and are used to determine the company's liquidity.

For example, if a company has $500,000 in current assets, this signifies the total of cash, inventory, accounts receivable, and other such assets expected to be utilized or converted to cash shortly. These assets are critical for the day-to-day operations of a business, providing the necessary funds for paying short-term debts and conducting routine transactions.

Current assets are categorized separately from non-current or long-term assets because they are liquid, meaning they are readily obtainable for use or sale, helping a business maintain its operations effectively.