Assets to calculate debt ratio


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What are assets?

Assets are anything available to meet commitments or offset debts and add financial value to a business or service. It may be money in the bank, investments, property or possessions.

Types of Assets

They can be categorised into short term or long term and are presented in balance sheet.

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Short Term or Current Assets

Generally speaking, they are expected to be used within a year.


  • cash and cash equivalents
  • outstanding invoices and short term debts
  • inventory stock
  • prepaid expenses

If it proves impossible to access a short-term asset, for example when a bill or debt isn’t paid the asset is recorded as written off.

Long Term or Fixed Assets

Some of your long-term assets, such as property, may be improved and increase in value while others will be subject to wear and tear which is recorded as depreciation.


  • Plant, machinery and office equipment
  • Buildings
  • Land
  • Fixtures and furniture
  • Software
  • Long-term investments such as stocks and bonds
  • Long term debts

Sometimes you may also have something called Intangible Assets. They do not have a physical presence but add value to your business and may include such things as trademarks, patents, logos, licences and customer goodwill.

Different accounting processes are used to measure these forms of assets although they are not always recorded. If, however, you have purchased an intangible asset such as a taxi licence or customer list or commissioned a company logo it will be recorded as adding value to your business.

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