Total assets

Assets are everything a company owns or controls that's expected to generate future economic benefit. They form the left side of the balance sheet and split into two broad categories: current assets, cash and anything expected to convert into cash or be consumed within twelve months, and non-current assets, the longer term resources the business relies on to operate over multiple years.

The formula is:

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 lot 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, and a SaaS company by intangibles and cash.

Most assets are recorded at historical cost under US GAAP, though financial assets such as marketable securities and derivatives are carried at fair value, and IFRS allows either historical cost or fair value depending on the asset class. That 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.