Overview
Assets are resources which are controlled by a company which have future economic benefits. Such as patents, land, equipment, etc..
Why are assets important?
Assets are very important when analyzing a company. The most obvious point being that the more assets a company has the more the company is worth. Also a company with a larger asset base should in theory have a higher potential for future earnings. Assets are also a key element when an industry takes a down turn as companies with larger asset bases can consolidate easier and weather the bad times better.
Assets are also a key component to determining the book value of a company. Using book value an investor can get an idea of whether a companies share is overvalued or undervalued as well. - read more about Book
value
When analyzing a companies assets it is also important to take into considerations any liabilities against those assets. If a companies liabilities outweigh their assets this is a sign that the company is performing poorly or is still in its growth stage.
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