asset

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noun as·set \ ˈa-ˌset also -sət \
Updated on: 26 Jul 2017

Definition of asset

1 assets plural
a :the property of a deceased person subject by law to the payment of his or her debts and legacies
b :the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts
2 :advantage, resource
  • His wit is his chief asset.
3 a :an item of value owned
b assets plural :the items on a balance sheet showing the book value of property owned
4 :something useful in an effort to foil or defeat an enemy: such as
a :a piece of military equipment
b :spy

Examples of asset in a Sentence

  1. The state's natural assets include mountains and beautiful lakes.

  2. rumors persisted that CIA assets were behind the coup d'état

Recent Examples of asset from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'asset.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of asset

back-formation from assets, singular, sufficient property to pay debts and legacies, from Anglo-French assetz, from asez enough, from Vulgar Latin *ad satis, from Latin ad to + satis enough — more at at, sad


Financial Definition of ASSET

asset

What It Is

An asset is an economic resource that a) can be owned, and b) is expected to provide future economic benefits.

How It Works

A company lists its assets on its balance sheet. Common asset categories include cash and cash equivalents; accounts receivable; inventory; prepaid expenses; and property and equipment. Although physical assets commonly come to mind when one thinks of assets, not all assets are tangible. Trademarks and patents are examples of intangible assets.

[InvestingAnswers Feature: Ten Things You Need to Know About Every Balance Sheet]

Assets are presented on the balance sheet in order of their liquidity. Current assets, which are expected to be consumed or converted to cash within one year, are listed at the top. Cash, short-term investments and inventory are examples of current assets.

Long-term assets, or fixed assets, are expected to be consumed or converted to cash after one year's time, and they are listed on the balance sheet beneath current assets. Property (such as office space or buildings) and equipment are common long-term assets.

Investors buy assets with the understanding that assets should hold, or even better, grow their economic value over time. Common asset classes for individual investors include stocks, bonds, cash, foreign currencies, collectibles, precious metals, real estate and commodities. A collection of assets is called a "portfolio," and it is widely believed that an individual's portfolio should include assets from several different categories, a process called "asset allocation."

Why It Matters

Assets create or preserve wealth, making them of utmost importance to both individuals and companies.

Financial analysts are encouraged to carefully study a company’s financial statements, including the balance sheet. By using the practice of ratio analysis, an analyst can determine how good a company is at using its assets to generate wealth for shareholders. Read on to learn how to use the following ratios:

Return on Assets (ROA) & Return on Net Assets (RONA) -- measures of how much profit is generated by a company's assets.

Current Ratio, Quick Ratio, & Acid-Test Ratio -- measures of a company's ability to meet short term obligations.

[InvestingAnswers Feature: Financial Statement Analysis for Beginners -- The Balance Sheet]


ASSET Defined for English Language Learners

asset

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noun

Definition of asset for English Language Learners

  • : a valuable person or thing

  • : something that is owned by a person, company, etc.


ASSET Defined for Kids

asset

play
noun as·set \ ˈa-ˌset \

Definition of asset for Students

1 :someone or something that provides a benefit
  • Your sense of humor is an asset.
  • She is an asset to the class.
2 assets plural :all the property belonging to a person or an organization

Law Dictionary

asset

play
noun as·set \ ˈa-ˌset, -sət \

legal Definition of asset

1 :the entire property of a person, business organization, or estate that is subject to the payment of debts used in pl. — compare equity
2 :an item of property owned
admitted asset
:an asset allowed by law to be included in determining the financial condition of an insurance company — compare nonadmitted asset in this entry
appointive asset
:an asset in an estate that is to be distributed under a power of appointment
capital asset
:a tangible or intangible long-term asset especially that is not regularly bought or sold as part of the owner's business; specifically :any asset classified as a capital asset by law (as section 1221 of the Internal Revenue Code)
current asset
:a short-term asset (as inventory, an account receivable, or a note) that can be quickly converted into cash
equitable asset
:an asset especially in an estate that is subject to the payment of debts only in a court of equity
fixed asset
:a tangible asset (as a piece of equipment) that is of a permanent or long-term nature
intangible asset
:an asset (as goodwill or a patent) that does not have physical form
marital asset
:an asset acquired by either spouse or both spouses during a marriage
Note: Marital assets are generally subject to equitable distribution on divorce.
net assets
1 :the excess of assets over liabilities called also net worth
2 :admitted assets considered as a whole
net quick assets
:the excess of quick assets over current liabilities
nonadmitted asset
:an asset not allowed by law to be included in determining the financial condition of an insurance company because it cannot be quickly converted into cash without incurring a loss — compare admitted asset in this entry
quick assets
:cash, accounts receivable, and other current assets except inventories
tangible asset
:an asset that has physical form and is capable of being appraised at an actual or approximate value
wasting asset
:property (as a copyright or oil well) that will eventually expire or be used up and lose its value

Origin and Etymology of asset

back-formation from assets, singular, sufficient property to pay debts and legacies, from Anglo-French asetz, from Old French asez enough



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