What Is the Difference Between Tangible and Intangible Assets?
Tangible assets are assets that exist in the form of specific physical products, including production tangible assets and non-production tangible assets. Production tangible assets refer to assets created by production activities. Non-productive tangible assets are assets that are naturally provided without production. Production of tangible assets includes tangible fixed assets, inventories (inventories) and valuables. Among them, tangible fixed assets are classified and accounted for by dwellings, other houses and buildings, machinery and equipment, and cultivated assets; inventories are classified and accounted for by raw materials and supplies, work in progress, finished products, and resale goods. Non-productive tangible assets include land, underground assets, non-cultivated biological resources, and water resources. [1]
Tangible assets
- Tangible assets refer to those assets in physical form, including fixed assets and current assets. Tangible assets mainly include:
- Including production tangible assets and non-production tangible assets. Production tangible assets refer to assets created by production activities. Non-productive tangible assets are assets that are naturally provided without production. Production of tangible assets includes tangible fixed assets,
- Brands are tangible assets with
- Profit performance management system applied to tangible asset management
- Measure the continuous growth of corporate tangible assets
- The tangible asset-liability ratio is the ratio of total corporate liabilities to total tangible assets.
- This indicator is an extension of the asset-liability ratio, and it is an indicator to more objectively evaluate the corporate debt-paying ability. The intangible assets of an enterprise, such as trademarks, patent rights, non-patented technologies, and goodwill, may not be used to repay debts. They can be regarded as insolvent assets and deducted from total assets. The function of this indicator and its analysis methods are basically the same as the asset-liability ratio.
- This indicator is an extension of the asset-liability ratio, which can more objectively evaluate the corporate debt-paying ability.
- Formula for calculating tangible asset-liability ratio
- Tangible assets debt ratio = total liabilities / (total assets-net intangible assets) × 100%
- Of which: total tangible assets = total assets-(intangible assets and deferred assets + pending expenses)
- Note: If the amount of pending expenses and deferred assets (or long-term deferred expenses) in the total assets is large, it should also be deducted from the total assets when calculating this indicator.
- [Example] For the convenience of explanation, the calculation of various financial ratios will mainly use XYZ company as an example. The company's balance sheet and profit statement are shown in Tables 1 and 2:
- Table 1
- Table 2
- According to the data in Table 1, the tangible asset-liability ratio of XYZ company is:
- Tangible assets and liabilities ratio
- Tangible assets
- Tangible asset-liability ratio
- Tangible assets