Managing assets is a crucial part of any business, as assets are the resources that a company uses to generate revenue. Companies need to know what assets they have and how long they will be useful for. Without identifying and cataloging assets, companies cannot make plans for their future. In this article, we will be talking about different types of assets so you can have a better idea of how to manage them.
What are assets
Basically, assets are resources that can be used to create future benefits. To put it simply, assets are anything that can be used to help a business generate more money. There are basically 6 types of assets, which are as follows:
Now that we know what assets are and the different types of assets, let us look closer at these 6 categories.
Current assets are the simplest of all types of assets in terms of how they are used. Current assets include cash, accounts receivable, inventory, and any other asset that has a lifespan of one year or less. In Simple words, current assets are assets that can be expected to be sold, exhausted, or consumed through the normal operations of a business within the current fiscal year or an operating cycle.
Fixed assets are also known as non-current assets. Fixed assets are more permanent in nature, meaning it takes time before they can be depleted or consumed. Fixed assets typically have a life cycle of over one year. Some examples of fixed assets include property, plant, land, buildings, and vehicles.
Non-tangible are just what they are called. They are intangible assets that do not have any physical presence. Non-tangible assets include patents, copyrights, trademarks, goodwill, and brand recognition. They are the brand value, the organization’s reputation, and other intangible factors that can gain or lose value over time.
Tangible assets are physical assets with a definite existence. They are easy to touch, feel, hear, or smell. Although they exist in the real world you cannot say exactly how much it is worth unless you have an open market to use as a guide. They are also difficult to turn into cash. A few examples of tangible assets are property, plant, and equipment.
Operating assets are also known as “working capital”. Operating assets are cash or other resources that will be used up in the normal course of business within one operating cycle, which is the time in which a business switches from making sales to getting money through the collection of receivables.
Non-operating assets are assets that are not part of the company’s core operations. These are cash or other resources that will not be used up within the normal course of business. An example would be a building owned by a company but is not part of its daily operations.
As important as it is to know what types of assets are out there, you have to learn how to manage them so they will give the company more benefit rather than cause problems. The six types of assets identified can easily be managed if you know what each one does for your business.