Definition
Assets are valuable resources, either physical or virtual, of financial worth that can be used, controlled and exchanged by an individual or company. A startup's assets are composed of both physical and mental elements, such as money, products, machinery, land & buildings and also intangible ones like intellectual property, branding and customer relations.
In the room
How the word shows up in a real conversation.
Sara is the proprietor of a clothing and accessories small retail business who has been in the industry for a few years now, but is aiming to extend her operations.
Sara made a wise investment in a warehouse to satisfy her inventory needs, taking out a loan to finance the purchase and renovate it. The asset became advantageous as it enabled her to store more products, boosting sales & profitability of her business.
The warehouse offers Sara the opportunity to invest in new machinery and technology which helps enhance her workflows and raises overall productivity. With these investments, Sara is able to increase output while reducing expenses, as well as complete tasks more quickly.
As Sara's business grows, she earns more profit and increases her revenue. Furthermore, she has built a name for herself for delivering top-notch products and unparalleled customer service.
In this scenario, the warehouse was a great asset for Sara's business that enabled it to grow and become more efficient. It enabled her to store additional inventory, raise revenues, and boost profits. The asset made a positive impact on her operations, allowing her to create a name for herself in delivering quality goods and outstanding customer service.
Common mistake
Using Asset/Assets as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Asset allocation
Strategy of distributing investment portfolio across different asset classes.
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Asset class
Group of investments with similar characteristics and risk-return profiles.
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Asset management
Professional service of overseeing and optimizing investment portfolios.
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Asset turnover
Financial ratio measuring how efficiently a company uses assets to generate sales.
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