Asset surplus

Asset Surplus

Asset surplus is an accounting concept which refers to the amount by which the estimated value of a companys assets exceed its liabilities. This surplus may also be referred to as the companys net worth or equity.

It is important to understand the concept of asset surplus as it can provide a picture of a companys overall financial health. The larger the asset surplus a company has, the better its financial health. This is because a high amount of asset surplus indicates that the company has a larger degree of financial cushion; they are able to support and grow their business without the risk of insolvency.

When looking at a companys long-term, Sustainable growth opportunities, asset surplus should always be taken into account. A company with an above-average asset surplus is usually much more likely to give a positive rate of return for investors because the more liquid assets a company has on-hand, the better its chances are of remaining profitable and expanding.

As well as helping to gauge a companys financial health, asset surplus can also be useful for assessing the companys profitability. If the value of a companys total assets outweighs their total liabilities, it indicates that the company is generating a positive profit.

At the same time, a high degree of asset surplus can be beneficial for those who wish to take on the additional risk of debt finance. By having significant levels of asset surplus, the risk of default is reduced; this means that lenders are more likely to provide funds to businesses with a healthy asset surplus.

In terms of managing asset surplus, it is important to have a strategy in place that allows you to make the most of it while protecting your financial position. For example, it is recommended that companies use excess cash to invest in assets, such as property or shares, which appreciate over time in value. This can help to generate a steady income stream, as well as providing a valuable financial cushion in the event of any unexpected costs or losses.

Overall, asset surplus is an important concept for businesses to understand and manage. By having a strong level of asset surplus, companies can gain a significant degree of financial security and manage their finances more effectively. As such, it is advisable to analyse your companys asset surplus and formulate an effective strategy for managing it, in order to help ensure sustainable growth and future success.

Asset count or inventory is the systematic and independent counting of the quantity and description of physical items of an inventory store or warehouse. It is an important task associated with the management of physical inventories, commonly carried out periodically to ensure that the correct quantity of items are present at any particular time.

Inventory counting done for the purpose of auditing or control is usually as part of wider process of asset count or surplus inventory counting. It is an aspect of inventory management that is regularly carried out to ensure the accuracy of inventory records and, by extension, the financial systems that depend on it.

The basic procedures for inventory count include :

1. A physical count of the inventory items in a designated area or in a predefined sequence, such as from top to bottom or from left to right.

2. A comparison of the physical count to the expected quantity contained in the existing records on hand.

3. Investigation and adjustment or physical count in case of discrepancies found between the two.

4. Discrepancies between the physical and expected quantities should be recorded and reported to the projects manager, who will be the decision-maker on any corrective action.

Conducting an inventory count helps accurate physical accountancy, which in turn ensures an accurate financial accountancy. This can help to avoid the possibility of loss of goods due to undiscovered stock leaking out of warehouses, or of goods that are not sold being forgotten about. It also helps to identify inefficiencies that are caused by overstocking which can strain cash flow.

Inventory count is thus essential for proper inventory management and it requires due care and attention to achieve the desired results in the best time-efficient manner.