Understanding Assets

What are Assets?

Assets are any income-generating resources a business has control of that improves the financial standing of the organisation. There are different classes of assets a business can acquire. Long and short term assets. There are certain unique features that make up this list of assets. 

Short Term Assets:

Your Short term assets are business resources you can readily convert to cash should the need arise. Your cash, of course, business inventory, short term investments, receivables, etc belong in this category. These are also referred to as liquid or current assets, for the obvious reason that they can easily be liquidated to cash.

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Long term Assets:

These are assets that are fixed, and have a longer useful life. They are generally the weight pullers your business has. It could be landed properties, plants and machinery, furniture and fittings and your long term investments. These can also be called fixed or Non current assets. With these, you don't go on a selling spree, you plan and strategise having exhausted all other basic options. 

Tangible Assets;

You probably already muttered, assets that you can see, in your mind, You guessed right.  These tangible assets are resources with physical existence controlled by the business.  The business's fixed assets as mentioned above are included in this category, as well as your cash, inventory and receivables for the sole reason that you can see, feel and touch them.

Intangible Assets:

Now your intangible assets are those that add monetary value to the business but are beyond physical grasp. Your business's goodwill belongs here. People can't see your goodwill physically, but it's present and markets the business so good that it brings in money. Your patents, copyrights, brand and trademark all fall within this category for the reason stated above.

Now learning to maximise your business's asset puts the business at an advantage as there's such a thing as a Return on Asset, which measures how well your assets are being utilized in bringing returns to the business. A lesson for another article.


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