Anything of value owned by a business that can be converted into cash. Assets are listed on the balance sheet and include cash, equipment, property, and intellectual property.
Assets are everything of value that a business owns or controls. They're the resources your company uses to operate, generate revenue, and grow. On a balance sheet, assets represent one side of the fundamental equation: Assets = Liabilities + Equity.
Current assets — expected to be converted to cash within one year:
Non-current (fixed) assets — held for longer than one year:
Your asset base tells you — and investors, lenders, and partners — what your business is worth and what it's working with. A company with strong assets relative to its liabilities is generally in a healthier financial position.
Example: A bakery's assets might include its ovens (equipment), the shop it operates from (property), flour and butter in stock (inventory), and cash in the till (cash). Together, these enable the business to operate and earn revenue.
Assets are typically recorded at their historical cost — what you originally paid — then adjusted over time through depreciation (for tangible assets) or amortization (for intangible ones). The exception is certain financial assets, which may be marked to market value.
The reduction in value of a tangible asset over time due to wear and tear. Businesses record depreciation as an expense to spread the cost of an asset across its useful life.
The net amount of cash moving in and out of a business over a given period. Positive cash flow means more money is coming in than going out.
The amount of money left after all expenses, taxes, and costs have been subtracted from total revenue. Also known as the bottom line.