Assets

Definition:

The value of any tangible property and property rights owned by a company less any reserves set aside for depreciation. Assets don't reflect any appreciation in value unless they're sold for the greater value.

Profits aren’t the only way to measure a company’s success. Youshould also be aware of how much your company is worth. One way todo this is to examine your company’s most updated balance sheet.That figure at the bottom for net worth, representing assets minusliabilities, is a good indicator of whether you’ve built value inyour business–and if you have, how much.

Don’t stop your valuation checkup with your balance sheet,though. There are a few other ways to measure value. One of themost important valuation techniques is based on expected futurecash flow, or how much cash your company should be able to throwoff for you or another owner in the next several years. Businessesare typically valued as a multiple of their future cash flows, butdifferent industries and types and sizes of businesses use avariety of indicators. To find out what rule applies to yourindustry, check with your trade association

Related Content

Product Development

The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product

Exit Interview

The formal conversation that takes place between an employee and an HR or other manager to determine the reason(s) the employee is leaving

Primary Market Research

Iinformation that comes directly from the source--that is, potential customers. You can compile this information yourself or hire someone else to gather it for you via surveys, focus groups and other methods.

Credit Policy

Guidelines that spell out how to decide which customers are sold on open account, the exact payment terms, the limits set on outstanding balances and how to deal with delinquent accounts

Mergers

The combination of one or more corporations, LLCs, or other business entities into a single business entity; the joining of two or more companies to achieve greater efficiencies of scale and productivity

Subchapter S Corporation

A special form of corporation that allows the protection of limited liability but direct flow-through of profits and losses