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Classification of Assets
Assets
Mostly assets are classified based on 3 broad
categories:
Traditional assets
The “traditional” asset classes are stocks, bonds,
and cash:
Stocks: value, dividend, growth, or sector-
specific (or a “blend” of any two or more
of the preceding); large-cap versus mid-
cap, small-cap or micro-cap; domestic,
foreign (developed), emerging or frontier
markets
Bonds (fixed income securities more
generally): investment-grade or junk
(high-yield); government or corporate;
short-term, intermediate, long-term;
domestic, foreign, emerging markets
Cash and cash equivalents (e.g., deposit
account, money market fund)
Depending on their
extent of convertibility,
Convertibility they are further divided
into fixed assets or
current assets.
Comprise assets that
Physical
are both tangible and
existence
intangible.
Depending on their
purpose of use, they
Purpose are categorised as
operating and non-
operating assets.
The following offers a fair idea about the different
types of assets in general:
Current assets or short-term assets
These types of assets can be readily converted into
cash or its equivalent resources typically within a
year and are known as liquid assets. For example,
cash equivalents, stock, marketable securities and
short-term deposits are some of the most common
current assets.
Fixed assets or long-term assets
Also known as hard assets and fixed assets, these
resources are not easy to convert into cash or its
equivalent kind. Generally, land, machinery,
equipment, building, patents, trademarks, etc. are
considered as fixed assets.
Tangible assets
Similarly, assets with a physical existence are
categorised as tangible assets. Resources like
stock, land, building, office supplies, equipment,
machinery and marketable securities, among others
are functioning examples of tangible assets.
Intangible assets
On the contrary, assets which do not possess a
physical existence come under the category of
intangible assets. The best examples of such
assets would be market goodwill, corporate
intellectual property, patents, copyrights, permits,
trade secrets, brand, etc.
Operating assets
Assets like cash, building, machinery, equipment,
copyright, goodwill, stock, etc. are termed as
operating assets. Typically, such assets are used to
generate revenue and to maintain daily operation.
Non-operating assets
Though these assets are not used for performing
daily operations, they tend to help generate
significant revenue. Some of the best examples of
non-operating assets are short-term investments,
vacant land, income generated through fixed
deposits, etc.
Alternative assets
Other alternative assets that may be considered
include:
Commodities: precious metals,
nonferrous metals, agriculture, energy,
others.
Commercial or residential real estate
(also REITs)
Collectibles such as art, coins, or stamps
Insurance products (annuity, life
settlements, catastrophe bonds, personal
life insurance products, etc.)
Derivatives such as options, collateralized
debt, and futures
Foreign currency
Venture capital
Private equity
Distressed securities
Infrastructure
Hedge funds
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Guru Gobind Singh Dr. APJ Abdul Kalam
Indraprastha Technical University
University (MBA) MBA Notes (KMBN,
Notes KMB & RMB Series
Read MBA Syllabus Notes)
wise notes of Read MBA Syllabus
GGSIPU,New Delhi wise notes of
20 Dec 2018 AKTU,LUCKNOW
In "GGSIPU MBA 8 Dec 2018
NOTES" In "AKTU MBA NOTES"
Guru Gobind Singh
Indraprastha
University (BBA) Notes
Read BBA Syllabus
wise notes of
GGSIPU,New Delhi
9 Feb 2019
In "GGSIPU BBA
NOTES"
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