Physical asset

Physical asset (tangible asset) is an item that has material existence. The assets possessed by a company can be divided to tangible and intangible. The tangible are (physical assets) are equipment, facilities, buildings, cars, etc. The intangible are knowledge, patents, procedures, processes, etc.

Physical assets are highly related to value of the company, because in case of liquidation of the company their value stays, while value of some intangibles can drop. Thus physical assets can be used to pay some of debts. However, physical assets loose their value over time - they depreciate, as they get older and sometimes outdated.

There is also third type of assets - financial assets: stocks, bonds, cash. Their value can fluctuate.

References

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