Asset Management

Marketable securities are financial instruments like stocks and bonds that can be easily bought or sold, making them liquid and suitable for short-term investments.

The asset turnover ratio is calculated as:

Asset Turnover Ratio
=
Sales
Total Assets
=
2
,
500
,
000
1
,
000
,
000
=
2.5
Asset Turnover Ratio=
Total Assets
Sales
​
=
1,000,000
2,500,000
​
=2.5

Assets are commonly classified into current assets (short-term), fixed assets (long-term tangible assets), and intangible assets.

Land is considered the least liquid asset because it takes time to sell and convert into cash, while cash is the most liquid, followed by accounts receivable and inventory.

Goodwill is a long-term, intangible asset, classified as a non-current asset. Accounts receivable, inventory, and marketable securities are typically current assets.

Intangible assets, like trademarks, are subject to amortization. Tangible assets like buildings, equipment, and trucks are subject to depreciation.

Financial assets are liquid assets that can be quickly converted to cash or represent a claim for cash. Cash is the most liquid financial asset.

Fixed assets are long-term assets like buildings, machinery, and equipment that are used in the company’s operations and are not intended for sale.

Land is a non-current (long-term) asset because it is not expected to be converted into cash within one year. Cash, accounts receivable, and inventory are current assets.

Patents are intangible assets because they represent intellectual property, unlike tangible assets like office buildings, inventory, and machinery.