Permanent Current Asset


DEFINITION of 'Permanent Current Asset'

The minimum amount of current assets a company needs to continue operations. Permanent current assets are current assets that are always replaced with like assets within one year. Inventory, depreciating assets, cash and accounts receivable are examples of this. These are the amount of current assets for the company to exist.

BREAKING DOWN 'Permanent Current Asset'

There are temporary and permanent current assets. A temporary current asset is a sudden increase in the accounts receivable and inventory due to a sudden increase in sales, such as with a fluctuating asset. A company growing over time has three types of assets: fixed assets, permanent current assets and fluctuating current assets. Fixed assets are long term. Fluctuating current assets are seasonal and occur when sales increase or decrease. Permanent current assets are always financed long-term similar to fixed assets.

  1. Cash

    Legal tender or coins that can be used to exchange goods, debt ...
  2. Current Assets

    A balance sheet account that represents the value of all assets ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses ...
  4. Tangible Asset

    Assets that have a physical form. Tangible assets include both ...
  5. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  6. Accountant

    A professional who performs accounting functions such as audits ...
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  1. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  5. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  6. What can working capital be used for?

    Working capital is used to cover all of a company's short-term expenses, including inventory, payments on short-term debt ... Read Full Answer >>

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