What are 'Other Current Assets - OCA'

Other current assets (OCA) is a category of a firm's assets that does not include cash, securities, receivables, inventory and prepaid assets, and can be convertible into cash within one business cycle, which is usually one year. The OCA account is listed on a firm's balance sheet and is a component of a firm's total assets.

BREAKING DOWN 'Other Current Assets - OCA'

A company's total assets listed on its balance sheet are made up of either fixed assets or current assets. Fixed assets typically have useful lives that span over a year and are not liquid. Current assets, on the other hand, can easily be liquidated for cash and are considered when calculating a firm's ability to pay short-term liabilities. Current assets are expected to generate economic benefits within one year or within the normal operating cycle of a business. Some examples of current assets include cash and cash equivalents, marketable securities, accounts receivable, inventory and prepaid expenses. Current assets that are not common will not fall into one of the defined categories listed above; instead, these assets will be lumped together into a generic “other” category and recognized as other current assets (OCA) on the balance sheet.

Sometimes, one-off situations, which will be explained in a company’s 10-K filings, will result in recognizing other current assets. Because these assets are recorded rarely, or are insignificant, the net balance in the OCA account is typically quite small. Examples of other current assets include: advances paid to employees, advances paid to suppliers, a piece of property that is being readied for sale, restricted cash or investments, and cash surrender value of life insurance policies.

Other current assets are expected to be disposed within a year, or to mature into another form. Thus, the value of a company's other current assets may vary greatly from year to year depending on the health of the company and how it spends its money. It is important to determine how material these assets are, as they may distort a firm's liquidity. If the funds in OCA grow to a material amount, it may include one or more assets that would need to be reclassified into one or more of the major defined current assets accounts. In effect, when funds in OCA grow to a significant level, the account becomes important enough to be listed separately and added to one of the major current accounts on the balance sheet. This provides insight for anyone reviewing the company’s balance sheet since the nature of the recorded items will be better understood.

Although it represents a limited source of liquidity for a company and may not have a significant impact on a business’s overall financial situation, other current assets may be discussed in the footnotes to the financial statements, which analysts and investors can refer to if they want information on a firm’s other current assets.

RELATED TERMS
  1. Current Assets

    Current assets is a balance sheet item that represents the value ...
  2. One-Cancel-All Order

    A one-cancel-all order is a set of multiple limit orders placed ...
  3. Asset

    An asset is a resource with economic value that an individual ...
  4. Optimal Currency Area

    An optimal currency area is the geographic area in which a single ...
  5. Net Liquid Assets

    Net liquid assets are a strict measure of an immediate or near-term ...
  6. Optimum Currency Area Theory (OCA)

    Optimum currency area (OCA) theory states that there are regions, ...
Related Articles
  1. Investing

    Ben Graham on Interpreting Financial Statements

    Seven pieces of advice from Benjamin Graham on understanding financial statements.
  2. Investing

    Evaluating Your Personal Financial Statement

    Determine your net worth by making your own cash flow statement and balance sheet.
  3. Investing

    How To Read Apple's Balance Sheet

    We explain how to find, read, and analyze a balance sheet from Apple.
  4. Managing Wealth

    Comparing Tangible and Intangible Assets

    Tangible assets are physical assets such as land, vehicles or equipment.
  5. Investing

    How to Analyze a Company's Financial Position

    Find out how to calculate important ratios and compare them to market value.
RELATED FAQS
  1. How do current assets and fixed assets differ?

    Current assets are short-term assets that are used up within one year. Fixed assets are physical assets and have a life of ... Read Answer >>
  2. What are liquid assets, and why are they beneficial to a business?

    Learn the difference between liquid and fixed assets, and how a company's liquidity affects its financial health. Read Answer >>
  3. The difference between fixed and current assets

    Learn the differences between fixed assets such as land and current assets such as cash, and how these types of assets appear ... Read Answer >>
  4. Does working capital include prepaid expenses?

    Discover how prepaid expenses can be classified as short-term assets included in the calculations for determining working ... Read Answer >>
  5. Does the balance sheet always balance?

    Yes, a balance sheet should always balance. The name "balance sheet" is based on the fact that total assets will equal the ... Read Answer >>
Trading Center