Definition:

Total Assets refer to the sum of all assets owned by an individual or entity, including both current and non-current assets. These assets are resources with economic value that are expected to provide future benefits.

Examples

Examples of total assets include cash, accounts receivable, inventory, property, equipment, and investments.

Formula:

Total Assets = Current Assets + Non-Current Assets

How to use the metric:

Total Assets are used to assess the overall financial health and stability of a business. They are a key component in financial ratios, such as the debt-to-asset ratio, which helps in evaluating a company's leverage and risk.

Limitations:

Total Assets do not provide insight into the quality or liquidity of the assets. They also do not account for the liabilities or obligations associated with those assets, which can lead to an incomplete picture of financial health.

Applies to:

Total Assets apply to all industries as they provide a fundamental measure of a company's resources. They are particularly useful in asset-heavy industries like manufacturing, real estate, and utilities.

Doesn't apply to:

While Total Assets apply broadly, they may be less informative in service-based industries where intangible assets and intellectual property play a more significant role, as these are often harder to quantify.

Summary:

Total Assets represent the cumulative value of all resources owned by an entity, providing a snapshot of its financial capacity. While useful for evaluating financial health, they should be considered alongside other metrics for a comprehensive analysis.