The term “assets” refers to everything a company owns. They are the economic resources it uses to increase sales, reduce costs or otherwise generate value for the owners. For example, buying computers and software for office workers can speed up daily tasks, increasing productivity.
Two broad categories of assets appear on a company’s balance sheet:
- Current assets used to generate value within the fiscal year
- Long-term assets (also known as fixed or capital assets) used to generate value beyond the next 12 months
Reviewing a company’s assets tells analysts and investors what management believes will generate the most value.
More about assets
The sample balance sheet below shows that ABC Co. had $300,000 in assets at March 31, 2012 ($120,000 in current assets and $180,000 in long-term assets).