Total assets

Assets are everything a company owns or controls that is expected to generate future economic benefit. They form the left side of the balance sheet and are divided into two broad categories.

Current assets are cash and anything expected to be converted into cash or consumed within twelve months. Non-current assets are long term resources the business relies on to operate over multiple years.

The total asset base represents the full deployment of capital in the business, funded on the other side of the balance sheet by a combination of liabilities and shareholders equity.

Analysts use total assets as the denominator in return on assets. One of the key measures of how efficiently management is deploying the capital entrusted to it.

The composition of the asset base reveals a great deal about the nature of a business. A capital intensive manufacturer will be dominated by property, plant and equipment. A bank by loans and financial instruments. A SaaS company by intangibles and cash.

Assets are recorded at historical cost under US GAAP and at either historical cost or fair value under IFRS depending on the asset class. This means the book value shown on the balance sheet can diverge significantly from the true economic value of what a company owns. Particularly for real estate, brands, and other assets that appreciate over time or were acquired long ago.