Operational Assets

Sample Solution

   

Operational assets are necessary for a business to operate. They are the resources that a business uses to generate revenue and produce goods or services. Operational assets can be divided into two categories: tangible assets and intangible assets.

Tangible assets are physical assets that can be seen and touched. They include things like property, plant, and equipment (PP&E), inventory, and accounts receivable.

Intangible assets are non-physical assets that have value. They include things like patents, trademarks, copyrights, and goodwill.

Full Answer Section

    Importance of operational assets Operational assets are important for a number of reasons. First, they allow a business to produce goods or services. For example, a manufacturing company needs PP&E in order to produce its products. Second, operational assets can help a business to generate revenue. For example, a retail company needs inventory in order to sell products to its customers. Third, operational assets can give a business a competitive advantage. For example, a company with a strong brand (an intangible asset) may be able to charge higher prices for its products than a company with a weak brand. Examples of operational assets Here are some examples of operational assets:

• Property, plant, and equipment (PP&E): This includes things like buildings, machinery, and vehicles.
• Inventory: This includes the raw materials, work-in-progress, and finished goods that a company has on hand.
• Accounts receivable: This is the money that customers owe a business for goods or services that have already been delivered.
• Patents: This is a government-granted right to exclude others from making, using, or selling an invention for a period of 20 years.
• Trademarks: This is a word, phrase, symbol, or design that identifies the source of goods or services and distinguishes them from the goods or services of others.
• Copyrights: This is a legal right that protects original works of authorship, such as books, movies, and music.
• Goodwill: This is the intangible value of a business that is not attributable to its specific assets. It can be seen as the reputation and customer base of a business.

How to manage operational assets It is important for businesses to manage their operational assets effectively. This includes tracking the assets, maintaining them, and replacing them as needed. Businesses should also track the performance of their operational assets. This can be done by calculating metrics such as return on assets (ROA) and asset turnover ratio. ROA measures how efficiently a business is using its assets to generate profits. Asset turnover ratio measures how quickly a business is turning over its assets into cash. By tracking and managing their operational assets effectively, businesses can improve their financial performance and achieve their business goals. Conclusion Operational assets are necessary for a business to operate. They allow a business to produce goods or services, generate revenue, and gain a competitive advantage. It is important for businesses to manage their operational assets effectively in order to improve their financial performance and achieve their business goals.