Information on assets

This information hub contains a list of the most commonly-used business and financial terms that have the word ‘asset’ in them, plus links to more comprehensive explanations.

Asset – anything an individual, company or other entity owns that has an economic value and may be converted to cash, such as stocks, property, vehicles, etc. Assets may be tangible (you can touch them) or intangible (you can’t touch them).

Asset Allocation – the spreading of investments in a portfolio so that they do not all rise and fall simultaneously.

Asset Class – a broad group of securities that investors purchase. The components that make up an asset class behave similarly in the marketplace and are subject to the same regulations. The three main asset classes are stocks, cash equivalents and fixed income.

Asset Management – managing clients’ money and assets in order to maximize profits. Client might be high net worth individuals, companies, governments, and other organizations.

Asset Stripping – the practice of acquiring a business and then selling off its assets separately. The net worth of the target company is lower than the individual value of assets (added up). The predatory acquiring company is known as a corporate raider.

Capital Assets – assets that a company requires to produce goods or deliver services. Examples include machinery, vehicles, equipment, etc. When a capital asset is sold, the seller may have to pay capital gains tax.

Current Assets – assets a business owns that may be turned into cash easily, i.e. within twelve months. In the UK the term current accounts is also used.

Financial Assets – intangible assets such as bank deposits, bonds and shares (stocks). Financial assets have no physical value (except for the paper they are written on); their value is derived from a contractual claim of what they represent.

Fixed Assets – assets that help a business make things and earn income. Fixed assets are not easily converted into cash. Examples include vehicle PP&E (property, plant and equipment), etc. Also called fixed capital.

Intangible Assets – assets that have no physical form, i.e. you cannot touch them. Examples include patents, brands, trademarks, and mining rights.

Liquid Assets – current assets that can be turned into cash quickly, i.e. within a month. The most liquid of assets are cash and checking accounts.

Net Asset Value (NAV) – a firm’s total assets minus its liabilities. This may also be the same as a business’ book value or equity value.

Risk Assets – types of assets that carry an element of risk, such as high-yield bonds, property, commodities, currencies and stocks. Their prices fluctuate.

Tangible Assets – assets that have a physical form, hence they can be touched, as opposed to intangible assets. Examples include equipment, cash, land, buildings and inventory.

Toxic Assets – financial assets that have lost either all or much of their value. This type of asset is likely to continue losing value. There is no longer a functioning market for a toxic asset.

Underlying Asset – a security on which a derivative is base, determining its price, such as a stock (share).