Practice Quiz

FRM Financial Risk Manager Practice Test

Category - Asset

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Current assets...
  1. Are important to company’s creditors.
  2. Are insignificant since investors only interested in long term assets.
  3. Are a source of fund for a company’s day-to-day operations.
  4. Can be converted into cash in less than a year.
Explanation
Current assets are important to a company’s creditors. If the company goes into bankruptcy, its current asset can easily be converted into cash and pay the debt to the company’s creditors. Current assets are also a source of funds for the company’s daily operations.

Key Takeaway: Current assets are the sum of cash and cash equivalents, inventories, account receivables, and other assets.
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