Financial assets
Financial assets is a kind of intangible asset which is also known as financial instruments or stocks (securities). These kind of assets are usually used for financing tangible assets like Plant & machinery, equipment and property (real estate). Financial assets help to transfer surplus funds of a company for financing tangible assets like real estate.
These assets are more liquid than any kind of tangible asset and can be easily converted into cash. The most common use of financial asset is that they are held for trading purposes in the business. They also have a fixed maturity period and it depends on the company till what they plan to hold the maturity. Financial assets should have monetary value as well.
Types of financial assets
The two most common types of financial assets are listed as under:
- Money is the basis in all types of exchanges and agreements, this can be in the form of bank deposits, bonds, cash, coins, etc. The main reason that money is financial asset because of the faith and commitment of the people towards the printed paper. The value of money is not in the paper alone.
- The common type of financial asset is stock. As stock is of value, it demonstrates financial asset.
Financial asset should be something that you can own for yourself.
