Financial Terms in Construction

Assets are most simply what a construction business has. They’re resources that hold value for a construction business because they can lead to cash. Types can include current assets, fixed assets and other long-term assets.

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Current assets are assets that can be easily converted cash within 12 months.

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• False

Fixed assets are resources that a construction business owns and uses for more than one year, such as buildings and machinery.

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Current assets are assets that are expected to be converted into cash or used up within a period longer than one year.

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Liabilities represent what a construction business owes to others, including loans and unpaid bills.

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Leverage are most simply what a construction business owes.

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Financial statements are the official record of a construction company’s financial activities and position.

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Current liabilities are obligations that a construction business is expected to settle within one year.

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Working capital is calculated as the difference between a construction company's current assets and current liabilities.

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Depreciation refers to the reduction in value of fixed assets over time due to wear and tear.

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