What is Tangible Asset?

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A tangible asset is an asset that has a finite monetary value and usually a physical form. Tangible assets can typically always be transacted for some monetary value though the liquidity of different markets will vary.

Definition

Tangible assets are assets that have a finite monetary value and usually have a physical form. These can include machinery, buildings, and land, and are typically tradable in the market, although their liquidity may vary across different markets.

Origin

The concept of tangible assets dates back to early commercial activities when merchants and businesses needed to assess the value of their physical possessions. With the advent of the Industrial Revolution, the reliance on tangible assets like machinery and equipment increased, further developing this concept.

Categories and Features

Tangible assets can be categorized into various types, including fixed assets (such as buildings and equipment), current assets (like inventory), and natural resources (such as land and minerals). Fixed assets are typically used for long-term purposes, while current assets are for short-term transactions. Natural resources have special value due to their scarcity and non-renewable nature.

Case Studies

Case Study 1: Apple Inc. owns a significant amount of tangible assets, including its offices and retail stores worldwide, which provide the infrastructure support for its operations. Case Study 2: ExxonMobil, as an oil company, primarily holds tangible assets like oil fields and refineries, which are central to its production and sale of oil products.

Common Issues

Investors often face challenges in valuing tangible assets, especially during market volatility. Additionally, the depreciation and maintenance costs of tangible assets are important factors to consider.

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Accounting Profit

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Accounting Ratio

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