Finance Formulas / July 19, 2018 / Alia Marquez
Current assets are important to businesses because they can be used to fund day-to-day operations and pay ongoing expenses. Depending on the nature of the business, current assets can range from barrels of crude oil, to baked goods, to foreign currency. On a balance sheet, current assets will normally be displayed in order of liquidity, that is, the ease with which they can be turned into cash.
Stockholders' equity is often referred to as the book value of the company, and it comes from two main sources. The first source is the money originally and subsequently invested in the company. The second source consists of the retained earnings the company accumulates over time through its operations. In most cases, especially when dealing with companies that have been in business for many years, retained earnings is the largest component.
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