What defines current assets in financial terms?

Current assets are defined as assets that can be easily converted into cash or consumed within one year or within the operating cycle of a business, whichever is longer. This includes cash, accounts receivable, inventory, and other short-term investments that are expected to provide cash flow in the near term.

The definition focuses on liquidity and the timeframe for conversion to cash. By ensuring that a business can meet its short-term obligations and fund operations, current assets play a critical role in a company's financial health. This characteristic of being readily liquidated allows businesses to respond quickly to unexpected expenses or opportunities that require cash.

The other options do not align with the definition of current assets. Assets that cannot be liquidated and long-term investments with high returns refer to categories of assets that don’t meet the liquidity criteria for current assets. Similarly, intangible assets that are not meant for sale represent a different asset class that does not fall under the current assets definition since they might not have a clear cash conversion within the specified timeframe.