The business of your dreams is just within your reach. All you need is a well-organized plan on how to get there.
If a business plan is a vehicle that carries your dreams, then creating a company assets list is the fuel that will power this vehicle.
The way you define your business’ assets is how you shape your ultimate success. Your business assets can either hold your company back or direct it in the right direction.
So what are assets? And how do you break them down?
In this guide, we will define business assets a company could possess.
The Importance of Having a Diverse Array of Assets
The assets a company could possess are:
- Cash
- Accounts receivable
- Inventory
- Prepaid expenses
- Property, plant, and equipment
Other assets may include goodwill, intangible assets, and investments.
How a company decides to finance its assets will also play a role in what assets the company owns. A company may elect to finance its assets through equity, debt, or a combination of the two.
The type of business will also play a role in what assets the company possesses. A manufacturing company will likely have different assets than a service company.
The size of the company will also impact the assets it possesses. A large company will have different assets than a small company.
Different industries will also have different types of assets. A company in the healthcare industry will have different assets than a company in the retail industry.
Goodwill
Goodwill is reported on the balance sheet as an asset. It is not amortized but tested for impairment annually. If the carrying value of goodwill exceeds its fair value, an impairment charge is to reduce the carrying value to its fair value.
Goodwill refers to the intangible benefits that a company acquires along with ownership interest in another company. These benefits are not physical in nature and typically arise due to reputation, clientele, and workforce. It is also considered an important part of many business acquisitions because it can be very difficult to quantify.
Some examples of goodwill assets are a company’s customer relationships, vendor relationships, and employee relationships. These are all considered valuable because they provide some type of competitive advantage or make it easier for the company to generate revenue.
Goodwill is often recorded on the balance sheet as an intangible asset. This is because it is difficult to quantify and can vary greatly in value. It’s not amortized, but impairment tests are happens annually to make sure that the carrying value does not exceed the fair value.
Money in the Bank
Cash is often considered the most important asset on the balance sheet. This is because cash is to keep the doors open and pay the bills.
Accounts receivable, inventory, and investments can be converted into cash, but it may not be easy or timely. Therefore, companies need to have a sufficient amount of cash on hand to cover their expenses.
Accounts Receivable
Accounts receivable are one of the most important assets a company can possess because they represent money that is owed to the company.
In the event of a loan, banks are typically more willing to lend money if it can be secured by accounts receivable. Accounts receivable can also be used to finance receivables-based lines of credit.
This type of financing is important because it allows a company to continue operating even if they are waiting on payment from customers.
Inventory
A company’s inventory is one of its most important assets. It represents the products or raw materials that the company uses to produce its goods or services. A company’s inventory can be divided into two categories: current assets and long-term assets.
Current assets are those that will be converted into cash within one year. This includes inventory, accounts receivable, and short-term investments.
Long-term assets are those that are on hold for more than one year. This includes land, buildings, and equipment.
Intangible Assets
Intangible assets are non-physical assets that have a current economic value to a business. Common examples of intangible assets include patents, copyrights, customer lists, and computer software.
The intangible assets of a business are often more valuable than the physical assets. This is because intangible assets are usually the key factors in generating revenue and profits.
Businesses rely heavily on intangible assets, it is important to manage them properly. This includes keeping track of the value of the assets, monitoring their performance, and taking measures to protect them from replication.
The value of intangible assets can decrease over time, so businesses need to continually invest in them to keep them fresh and valuable.
When done correctly, managing intangible assets can be a major key to success for any business.
Property, Plant, and Equipment
These assets are important because they are what a company uses to generate revenue and profit.
PP&E is a company’s physical or tangible assets that are in the production of goods and services. These assets include land, buildings, machinery, equipment, and vehicles.
Moreover, through an asset recovery provider, you can ensure the secure handling of these devices as they’re refurbished, resold, or recycled.
If done correctly this process can provide you with revenue to aid in the purchase of upgrades or to pay for the recycling of older equipment you may not have in your budget.
Company Assets List 101
The company assets list is the most valuable possession for any business. It is essential for a company to have a clear understanding of its assets and to manage them carefully.
These assets can include anything from cash and investments to property and business equipment.
As a business owner, it is important to be aware of your company’s assets list. This will help you make informed decisions about how to best use and protect them.
Read the rest of the blog for more company-related articles like this one.
