Physical assets are tangible items owned by a company, including equipment, real estate, inventory, and cash. They can be sold for cash and are listed on a company’s balance sheet. Unsold inventory and financial items like cash, stocks, and bonds are also considered physical assets.
Physical assets are tangible items owned by a company or individual. In general, these assets have some value and can be sold to raise cash if necessary. Physical assets are the opposite of intangible assets, which include patents, stocks, and intellectual property. Companies keep track of these assets on the company’s balance sheet, which is used to help managers and investors determine the value of the business. Some common examples of physical assets include equipment, real estate, inventory, and cash.
If a company owns property or real estate, this property is considered a physical asset. This can include land where the company’s headquarters building is located, as well as land used for warehouses, manufacturing, and retail outlets. Any buildings or other structures on land are also physical assets. Materials and fixtures within buildings such as lights, doors, hardware, and refrigeration units can also be sold for cash and thus serve as a physical asset. Companies involved in mining, drilling, or logging may have significant physical assets in the form of land, including timber or natural resources found on the property.
Any equipment used in the business can also be sold for cash and therefore represents a physical asset. This includes company trucks and vehicles, as well as desks, office furniture, and supplies. In an industrial or manufacturing business, equipment and tools can have significant value, particularly in large or relatively new facilities. Other equipment includes cleaning supplies, company computers, printers, fax machines, and even phone systems.
Physical assets also include unsold inventory in a finished and unfinished state. This can refer to complete products that have not yet shipped to stores, or simply the raw materials used to make these products. For example, in an electronics plant, all mechanical and electrical components used to make final products may be sold for cash. The same goes for finished electronics, like TVs or computers that haven’t shipped to retailers yet. Even raw materials and supplies that have been paid for but have not yet arrived can be considered a physical asset.
The physical assets of a company can also include cash and other financial items. This includes cash on hand, as well as cash in banks and investment accounts. Stocks and bonds that can be converted to cash are also considered physical assets, while a company’s own stock is not included in this category.
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