Assets

The assets tell you how the investors’ money has been used. The expenses can be divided into two groups: fixed assets and current assets.

Fixed assets
The fixed assets represent the long term investments which a company makes. They include:

  • Intangible assets: licences which people can use for longer than a year, for example a software licence, or goodwill.
  • Tangible assets: investment in things such as buildings, installations, computers, machines,…
  • Financial assets: these are the sum of money which the company has invested in other companies (shares).

Current assets
A company doesn’t just spend money on long term investments, a lot of money is taken up by the companies activities themselves: buying and selling goods and services.

The following are included in the current assets:
Inventory: A company that sells products has an inventory. This inventory eats a lot of cash, and often has a cost of storage and depreciation.
Receivables: When a company sells products and services, not all clients pay immediately. We call these unpaid invoices receivables.
Cash: cash at bank and on hand

In order to better understand the assets, we’ll continue with the example we used previously.

How do you read this balance sheet?

Liabilities: where the money comes from. The company has been financed by

  • Equity of 50,000 EUR, of which 40,000 capital provided by the shareholders and 10,000 EUR reserves from past profits.
  • Debts of 50,000 EUR, of which 5,000 EUR needs to be repaid within a year

    Assets: where the money goes to. This company has invested its money in

  • Fixed assets, of which 10,000 EUR intangibles (patents) and 50,000 EUR tangibles (building).
  • Current assets, of which 15,000 is tied up in the inventory; 10,000 EUR due from customers who haven’t paid their invoice yet, and 15,000 on the bank account.