Total Assets

Total Assets is an accounting and finance term and refers to the sum of all of a company's resources that are owned or controlled by the company, which can be used to generate revenue or benefit the company in the future.

Includes both current assets, which are assets that are expected to be converted into cash within one year or less, and long-term assets, which are assets that are expected to provide economic benefits for more than one year.

Total assets are an important metric for evaluating a company's financial health and its ability to generate revenue and profits. Investors and creditors use total assets to assess a company's liquidity, solvency, and the overall value of the company.

Example:

  1. Obtain the company's balance sheet: The total assets of a company can be found on its balance sheet, which is a part of financial statement that shows a company's assets, liabilities, and equity.
  2. Identify the current assets: Current assets are assets that are expected to be converted into cash within one year or less, and may include cash and cash equivalents, accounts receivable, and inventory. Add up all of the current assets listed on the balance sheet.
  3. Identify the long-term assets: Long-term assets are assets that are expected to provide economic benefits for more than one year, and may include property, plant, and equipment, intangible assets, and long-term investments. Add up all of the long-term assets listed on the balance sheet.
  4. Add the current and long-term assets: Once you have identified all of the current and long-term assets, add them together to get the total assets of the company.
  5. Other formula: Total Assets = Total Liabilities + Shareholders Equity

Let’s say a company has current assets of $500,000 and long-term assets of $2,000,000. The total assets of the company would be $2,500,000 ($500,000 + $2,000,000) or company has a total liabilities of $4,500,000 and shareholders equity of $2,000,000. The total assets of the company would be $2,500,000 ($4,500,000 - $2,000,000).