What are current assets and current liabilities in relation to cash flow?

Question

Accepted Answer

Current assets are assets that can be easily converted into cash within a year, while current liabilities are debts that are due within a year. They both impact cash flow.

Current assets include cash, accounts receivable, and inventory.
Current liabilities include accounts payable, short-term loans, and accrued expenses.
Having high current assets relative to current liabilities indicates good liquidity and positive cash flow.
Conversely, having high current liabilities relative to current assets can indicate potential cash flow issues.

What are current assets and current liabilities in relation to cash flow?

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