When it comes to business, there are two types of assets that are physical assets and intangible assets. Physical assets are things that you can see and touch, such as property, equipment, and inventory. Intangible assets are things that you cannot see or touch, such as trademarks, copyrights, and patents. Physical assets are defined by their tangibility, which is what gives them their value. Physical assets are those assets that can be used to produce goods or services, this is in contrast to intangible assets, which are things like intellectual property or goodwill. Intangible assets cannot be touched or used to produce anything tangible; they are simply ideas or concepts. In order to get a better idea about this concept, one should look at some of the important features of physical assets –
Characteristics of Physical Assets
Tangibility
The first and foremost feature of physical assets is that they are tangible in the sense that one can see and touch them and that is the reason why physical assets are used to produce goods or services unlike other assets like intangible assets or human assets and it is this tangibility property that makes them a valuable form of property since the company can use them in day to day operations of the company. Besides it is easy to identify and track physical assets as they can be easily seen which is not the case with intangible assets like goodwill or patents.
Durability of Physical Assets
Physical assets are also valuable because they are durable. This means that they can last for a long time and withstand wear and tear. Hence businesses can use the physical assets over and over again to generate revenue. This is in contrast to intangible assets, the value of which is dependent on other factors, or human capital which have a finite life. Hence in simple words when it comes to physical assets its durability is unmatched when one compares it with other types of assets and hence they are irreplaceable.
Portable, Storage and Transportation
Another important characteristic of physical assets is that they are portable, meaning that they can be moved from place to place. Besides physical assets are easy to store and transport. This makes them a valuable commodity, especially in times of crisis when other resources may be scarce. Intangible assets are not as easy to store and transport, which can make them more difficult to access in times of need.
Marketability of Physical Assets
Marketability is another important feature of physical assets because physical assets are recognizable, meaning that they are known and recognized by people. This makes them easy to market and sell to people. In simple words, if one is asked whether he or she likes digital currencies or physical currencies then the majority will prefer physical currency over digital currency due to its physical form and recognition same thing applies to physical assets when one compares it with intangible assets. In simple words, one can say that physical assets often have an intrinsic value that goes beyond the monetary value.
Current and Fixed Assets
Physical assets can be broadly divided into two categories one is current assets which include items like cash, inventory, bills receivables, stocks, and so on. While the second category is fixed assets which include items like machinery, furniture, vehicles, and so on.
As one can see from the above characteristics that physical assets are an important part of any business and that is the reason why a company looking to start or grow a business should ensure that physical assets are put to good use as with the right strategy, physical assets can help a company big way in achieving the goals set by the company during the planning stage.