Lesson 01 — Assets: What the Company Owns
Week 05 · Lesson 1 of 4 · Week 05 — Reading a Balance Sheet
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Things the company uses for more than 1 year: Property, Plant & Equipment (PPE) — factories, land, machinery Intangible Assets — goodwill, patents, software,...
Two types of assets
Non-Current Assets (Fixed / Long-term)
Things the company uses for more than 1 year:
- Property, Plant & Equipment (PPE) — factories, land, machinery
- Intangible Assets — goodwill, patents, software, brand value
- Long-term Investments — equity in subsidiaries, bonds held to maturity
- Right of Use Assets — leased offices/equipment (IndAS 116)
Current Assets (Short-term)
Things that convert to cash within 1 year:
- Inventories — raw materials, work-in-progress, finished goods
- Trade Receivables — money customers owe (debtors)
- Cash & Cash Equivalents — bank balance, liquid funds
- Other Current Assets — prepaid expenses, tax refunds due
Asset-heavy vs Asset-light
IT companies (TCS) have mostly current assets. Manufacturing (Tata Steel) has huge PPE. Different business models → different asset structures.
What to look for
| Signal | Meaning |
|---|---|
| Growing PPE | Company is investing in capacity |
| Rising inventories (faster than revenue) | Possible demand issue |
| Rising receivables (faster than revenue) | Customers taking longer to pay |
| Large goodwill | Past acquisitions — check if they're profitable |
Key takeaway
Assets shows where the company has deployed capital. The quality and mix of assets tells you about the business model.