Real assets are physical assets that your business owns, for example property, cars or machinery.
Assets are any valuable resources that your business owns. Assets can be divided into the categories real assets, financial assets, and intangible assets. These can be further divided into categories such as operating assets and liquid assets and so on.
Real assets are physical objects, such as property, buildings, vehicles or machines, that your business owns.
Different types of assets
Real assets are, in other words, the large, physical objects that make up the total assets of a company.
However, real assets don’t include all physical objects in your company; Inventory does not count as a real asset because it’s not a constant asset, it’s sold and replenished continually.
Financial assets are money and financial resources that your business has, such as cash, bank deposits, money that clients owe you, also called accounts receivable. Some of these assets can be called current assets and some are liquid assets.
Intangible assets are non-physical assets that still provide value to your business, such as a good reputation or a strong brand presence.
It can be difficult to define assets—if you need help assessing your assets or with your accounting, you should speak to an accountant.
Real assets are not as liquid as financial assets
Liquidity is a word that describes the ability your business has to pay bills from suppliers and cover fixed costs, as well as unforeseen expenses.
Many financial assets are considered liquid assets because they’re either cash or assets that can quickly be turned into cash.
Real assets are considered less liquid than financial assets because they’re more difficult to quickly convert into cash. The assets are valuable, but it’ll take longer to convert them into cash, for example by selling property or machinery.
To have good liquidity in your company, you should have financial assets in addition to real assets.