Assets

Any possession of an individual or corporate which could be converted to cash is known as Asset. These properties could be in the form of cash, securities, receivable accounts, office equipment, real estate, car and other properties. Liabilities and retained earnings take the form of assets in the balance sheet. Assets could be categorized into current assets and deferred assets. Current assets include tangible assets like cash, real estate and equipments while deferred assets could be expenditure for future which would include insurance, rent and intangible assets like trade mark, patents and goodwill. The asset which is used in the daily operations of a business is used as active asset. Investment in securities and special funds are known as long term investments.

Asset and Liability Management:

Excepting software companies, manpower is not considered as an asset though they generate income for their companies. The capacity of an entity as a single or in combination with other assets to generate profit determines its status as an asset. Liabilities and equities are also considered as assets. Assets are listed in a mathematical form in a balance sheet where they can be calculated. Assets are subject to many types of risk like liquidity risk, interest rate risk, credit risk and operational risk. These risk factors are managed by the asset liability management where assets and liabilities are managed by maturity pattern. Black Scholes model and Jarrow Turnbull model are a few of the risk management methods of properties.

Asset Management:

Asset management is a structured approach of long term management of assets which is expected to be profitable and highly beneficial. It maintains and upgrades the resources with economic rationale and accommodates flexible approaches to make the right decision. These owned properties should be properly identified with relevance to community benefits. These properties should be properly balanced and disposed.

Asset management could include financial asset management, enterprise asset management and public asset management. Managing the collective investment and global assets is known as the financial asset management. The business process which includes physical asset management, fixed asset management, IT and digital asset management is known as enterprise asset management.

Asset under Management:

An asset under management refers to the market value of the investments managed by mutual fund or portfolio manager. Financial services use these assets under management to compare the success of a company in comparison with its rival instead of the company’s revenue.

Questions:

• What are the two methods of risk management in assets?
• Explain asset management.